ABUJA, Nigeria — Nigeria’s foreign currency reserves have risen above 54 billion U.S. dollars for the first time in nearly 18 years, giving Africa’s most populous country a stronger financial cushion as the naira recovers from years of heavy pressure.
Central Bank of Nigeria data showed gross external reserves at about 54.08 billion dollars on Sept. 3, up from 45.56 billion dollars at the beginning of January. The increase of more than 8.5 billion dollars puts the reserves at their highest level since December 2008, when they were about 54.21 billion dollars.
Foreign reserves consist largely of international currencies and other assets held by a central bank. They are important because they help governments pay overseas obligations, finance imports and provide support when their currencies come under pressure. Nigeria’s liquid reserves were about 53.55 billion dollars, indicating that most of the holdings were readily accessible for foreign exchange needs.
The buildup has accelerated in recent weeks. Reserves crossed 53 billion dollars in late August and continued rising through the beginning of September. The latest figure is also about 3 billion dollars higher than the central bank’s projected reserve level of 51.04 billion dollars for the end of 2026.
Central Bank Gov. Olayemi Cardoso has linked the improvement to stronger foreign currency inflows, including revenue from crude oil related taxes and other sources. Nigeria remains one of Africa’s largest petroleum producers, making oil earnings an important source of dollars for the government and the wider economy.
The reserve gains have coincided with an improvement in the naira. The currency strengthened to about 1,315 naira to the U.S. dollar in the official market Thursday, its strongest level in roughly two years, before slipping to about 1,321 on Friday. The naira had last traded around the 1,300 level in April 2024.
The improvement marks a significant shift from the turmoil that followed Nigeria’s foreign exchange overhaul in 2023. After President Bola Tinubu took office, authorities loosened longstanding controls on the naira in an effort to narrow the gap between official and unofficial exchange rates and attract foreign investment. The transition contributed to a steep depreciation of the currency and higher costs for imported goods.
Since then, the central bank has tightened monetary policy and introduced changes intended to increase transparency and dollar liquidity in the currency market. Cardoso has argued that earlier reforms strengthened Nigeria’s ability to withstand global disruptions, saying in July, “We had resilience and we were able to withstand the shocks.”
The comparison with 2008 provides an important historical benchmark. Nigeria accumulated exceptionally large reserves during the commodities boom of the 2000s, when high crude oil prices generated substantial foreign earnings. Reserves later declined as oil prices weakened and the country faced repeated shortages of foreign currency.
A stronger reserve position could make it easier for Nigerian businesses to obtain dollars for machinery, raw materials and other imports while giving the central bank more room to manage periods of market volatility. A sustained strengthening of the naira could also reduce some imported costs, although changes in exchange rates do not immediately translate into lower prices for consumers.
The latest figures offer policymakers an encouraging sign after several difficult years for Nigeria’s currency. But maintaining the improvement will depend on continued foreign exchange inflows, stronger exports and investment, and the government’s ability to reduce the economy’s longstanding dependence on crude oil as its principal source of foreign currency.
