Market News

•Naira defies volatility, gains N2.75 in May

By Chinwendu Obienyi

Nigeria’s foreign exchange reserves strengthened further in May, climbing to $49.26 billion and moving closer to the psychologically significant $50 billion mark, as improved foreign currency inflows and sustained market reforms continued to support the country’s external position.

Latest data show that the country’s gross external reserves increased by $900 million from $48.36 billion recorded at the end of April 2026, representing a 1.86 per cent month-on-month (m/m) growth. The rise in reserves coincided with a marginal appreciation of the naira, which closed May at N1,373.25/$1 compared with N1,376/$1 at the end of April.

External reserves serve as a critical buffer against external shocks, helping the country meet its international obligations, stabilize the domestic currency, and provide confidence to foreign investors. The steady increase in reserves over recent months is expected to strengthen the Central Bank of Nigeria’s (CBN) ability to support market stability while maintaining adequate foreign currency liquidity.

Experts say the reserve accretion reflects a combination of factors, including stronger oil receipts, increased non-oil foreign exchange inflows, improved remittance channels, and sustained foreign portfolio investment flows into Nigerian financial assets.

In the oil market, Brent crude front-month futures traded largely flat at $93.84 per barrel early on Friday, while U.S. benchmark West Texas Intermediate (WTI) slipped 0.12 per cent to $88.94 per barrel. At the time of writing, Brent crude had declined further by 1.74 per cent to $92.08, while WTI fell 1.52 per cent to $87.55.

Chief Economist, SPM Professional, Paul Alaje attributed the development to improving liquidity conditions in the official foreign exchange market, supported by policy measures aimed at enhancing transparency and deepening market activity. Alaje added that these reforms have helped narrow distortions in the market and encouraged greater participation from foreign investors.

“The near-$50 billion reserve level also compares favourably with Nigeria’s recent historical performance. It provides a more robust cushion for the economy at a time when authorities are seeking to consolidate macroeconomic stability, moderate inflationary pressures, and sustain economic growth.

Maintaining the upward trajectory of reserves will depend on several factors, including international crude oil prices, domestic oil production levels, capital inflows, and the continuation of market-friendly policies. Sustained improvements in export earnings and foreign investment inflows could further strengthen Nigeria’s external position in the months ahead”, he explained.

With reserves now standing at $49.26 billion, attention is turning to whether Nigeria can cross the $50 billion threshold in the coming weeks. If the current pace of accumulation is maintained, the milestone could further reinforce confidence in the country’s foreign exchange market and signal continued progress in rebuilding external buffers.

For now, the combination of rising reserves and a stable naira suggests that Nigeria’s external sector is entering the second half of the year on a stronger footing, providing a measure of optimism for investors, businesses, and policymakers alike.