Nigeria’s foreign exchange reserves have climbed to $46.7 billion, reaching their highest level in eight years . The significant increase, confirmed by Central Bank of Nigeria (CBN) data, signals a strengthening of the country’s external finances and marks a dramatic reversal from recent years.
The reserve build-up is largely driven by a 91 percent month-on-month surge in foreign exchange inflows, which hit $6.1 billion in October 2025 . This represents the strongest single month for inflows since May, fueled by renewed foreign investor interest and the proceeds from a recent Eurobond issuance . The federal government’s $2.35 billion Eurobond was oversubscribed by 400 percent, demonstrating growing international confidence .
The naira held relatively steady in the official market amid the rising reserves. It closed marginally lower at N1,448.03 against the U.S. dollar, while it gained slightly to N1,455 in the parallel market . This stability comes as the country’s external reserve position continues to improve.
Analysts link the rebound to “carry-trade opportunities” created by Nigeria’s high domestic interest rates and recent policy easing by the U.S. Federal Reserve . The wide interest rate differential has made Nigerian assets highly appealing to offshore investors seeking better returns. Data from FMDQ showed that foreign investors accounted for more than half of the total FX inflows in October, which rose by 161 percent to $3.5 billion . Inflows into fixed-income securities alone stood at $3.4 billion, underscoring strong demand for the country’s high-yield instruments .
The reserve accumulation is seen as clear evidence that aggressive monetary and currency reforms championed by CBN Governor Olayemi Cardoso are yielding positive results . Since assuming office, Cardoso has overseen a return to orthodox monetary policy. This has included dismantling multiple exchange rate windows, unifying the foreign exchange market, and settling a backlog of verified FX obligations to airlines and manufacturers . “We are building a transparent, market-driven foreign exchange system that will restore investor confidence and support long-term economic growth,” Cardoso stated recently .
The reforms have drawn positive attention from global rating agencies. S&P Global revised Nigeria’s sovereign outlook from ‘stable’ to ‘positive,’ affirming its ‘B-/B’ rating . Moody’s Investors Service also raised Nigeria’s long-term issuer rating, citing strengthened external-financing conditions and improved FX liquidity . These upgrades mark a significant psychological and financial break from a past often criticized for policy inconsistencies .
The rising reserves are easing pressure on the naira and enhancing the CBN’s ability to intervene in the market to smooth volatility . This newfound stability is crucial for business planning and investor confidence. Samuel Sule, CEO of Renaissance Capital Africa, said the return of macroeconomic stability and highly attractive real returns are drawing investors back to the local currency debt market .
Despite the surge in foreign portfolio investment, Foreign Direct Investment (FDI) inflows tell a different story. They fell by 25 percent month-on-month to $222 million, reflecting persistent structural challenges such as insecurity and policy uncertainty that continue to deter long-term capital . This highlights the need for continued reforms beyond the financial sector.
The economic improvements are also showing in inflation data. Nigeria’s headline inflation dropped sharply to 16.05 percent in October from 18.02 percent in September 2025 . The figures show a broad-based easing across key inflation components, with core inflation declining to 18.69 percent and food inflation falling to 13.12 percent . This moderation, alongside high reserves, may pave the way for deeper policy easing, though the Monetary Policy Committee continues to maintain one of the highest policy rates globally at 27 percent .
Tilewa Adebajo, chief executive officer of CFG Advisory, confirmed that the CBN reports reserves have hit an eight-year high of $46.7 billion . The last time Nigeria’s reserves approached this level was in August 2018 . The current reserve level provides a critical buffer for the economy. It strengthens Nigeria’s ability to meet external obligations and withstand global economic shocks.
Market analysts say the CBN may be entering its most successful policy phase in years. They caution, however, that sustaining these gains will depend on continued discipline in fiscal and monetary coordination . The government’s ability to address underlying structural issues will be key to transforming recent financial inflows into lasting economic growth .