Market News

By : Isaac Chibuife

Fitch Ratings has projected that Nigeria’s foreign exchange reserves will fall to $47 billion by the end of 2026, citing higher spending pressures and external risks.

The global rating agency, which affirmed Nigeria’s Long-Term Foreign Currency Issuer Default Rating at ‘B’ with a Stable Outlook, noted that gross FX reserves rose to $49.4 billion at the end of March 2026, up from $32 billion in mid-April 2024. Despite the projected decline, Fitch said reserves would still cover seven months of external payments, well above the ‘B’ category median of 4.3 months.

Fitch acknowledged that the Central Bank of Nigeria reforms have supported market stability and relative naira stability but warned that fiscal pressures and external vulnerabilities could trigger modest currency depreciation in the near term.

On the fiscal side, the agency expects the budget deficit to widen to nearly five per cent of GDP in 2026, with revenue rising only marginally to about 11 per cent of GDP below the average for similarly rated countries. Inflation is forecast to average 16 per cent this year, down from 23 per cent in 2024, while real GDP growth is expected to hold at 4.1 per cent, driven partly by oil sector performance.

Nigeria’s gross reserves peaked at $50.45 billion in February 2026, the highest in over a decade, before slipping to $48.85 billion as of April 9. The CBN has projected that reserves will reach $51.04 billion by year-end.

Fitch flagged persistent inflation, weak revenue mobilisation, security challenges, and governance concerns as risks that continue to weigh on Nigeria’s credit profile.