Market News
Experts urge CBN to use stronger reserves to stabilise naira
As calls mount for the Federal Government to reconsider the removal of fuel subsidy, economist and BudgIT co-founder, Oluseun Onigbinde, has urged the Central Bank of Nigeria (CBN) to leverage the country’s stronger external reserves to support the naira and ease pressure on households.
Onigbinde argued that returning to the previous fuel subsidy regime would be wasteful and unsustainable, particularly because Nigeria does not currently have sufficient domestic production capacity to provide a broad-based discount on petrol without placing another significant burden on public finances.
His position comes as Nigeria’s external reserves have risen significantly in 2026. According to the latest CBN data reported on August 25, the country’s reserves stood at about $52.83 billion as of August 21, 2026, representing an increase of about $7.27 billion from the beginning of the year.
The stronger reserve position gives the monetary authorities a larger external buffer to manage foreign exchange pressures and support confidence in the naira.
Speaking on his X page, Onigbinde said the CBN should “quietly strengthen the naira” using the improved reserve position, while the Federal Government works to raise oil production and expand non-oil exports to ensure that any improvement in the exchange rate is supported by stronger foreign exchange earnings.
The CBN itself identifies preserving the value of the domestic currency and maintaining a favourable external reserves position among the objectives of Nigeria’s exchange-rate policy.
According to Onigbinde, a stronger naira could have wider fiscal and economic benefits. He argued that an exchange rate closer to N1,000 to the dollar could reduce the naira cost of servicing foreign-currency debt, while also lowering imported inflation and general price pressures.
He, however, stressed that exchange-rate policy alone would not resolve the hardship facing Nigerians. He called for the Federal Government and states to develop a credible social protection framework, including consideration of a dedicated Federation fund for safety nets.
Onigbinde also said the Federal Government should create incentives and “nudges” for states to improve fiscal performance, arguing that simply pointing to increased allocations to states is insufficient to address the public’s concerns.
“There is still huge trust deficit as well as asymmetry on how funds directly benefit citizens,” he said, stressing that government must communicate clearly what the end point of the current economic adjustment will look like.
He questioned the treatment of government savings and buffers, arguing that the country should not dismiss mechanisms such as the Excess Crude Account, which he said had served a useful purpose during periods of revenue shortfalls.
He also maintained that the Federal Government must accept responsibility for providing relief because it took the major policy decisions around subsidy removal and exchange-rate reforms and receives a significant share of the resulting fiscal gains.
“The solution is therefore not a return to an expensive, generalized fuel subsidy, but a broader economic compact combining a stronger naira, higher production, targeted safety nets and greater transparency over how the fiscal gains from reform are being deployed”, Onigbinde said.
