Nigeria’s FX Reserves Cross $50bn as Cardoso Reforms Reshape CBN
By Akin Alade
Nigeria’s foreign exchange position has undergone a major transformation in three years, with external reserves climbing beyond the $50 billion mark after the Central Bank of Nigeria battled a multibillion-dollar FX backlog, market distortions and declining confidence in the country’s monetary system.
The turnaround has placed renewed attention on the reform programme pursued by the Central Bank of Nigeria under Governor Olayemi Cardoso, who assumed office in September 2023 at a time when the foreign exchange market was facing severe liquidity pressures.
At the centre of the crisis was a backlog of more than $7 billion in matured foreign exchange obligations, alongside multiple exchange-rate distortions and concerns over the credibility of monetary policy.
The CBN subsequently cleared the verified FX backlog as part of a wider attempt to restore confidence and improve liquidity in the foreign exchange market.
Three years later, Nigeria’s external position presents a markedly different picture.
External reserves crossed the $50 billion threshold in June 2026 and continued rising, reaching about $53.11 billion by August 24, according to CBN data.
The development represents more than an increase in the country’s stock of foreign currency. Stronger reserves provide an important buffer against external shocks and improve the monetary authorities’ capacity to meet international obligations.
Economic experts assessing Ca
rdoso’s three years at the helm of the apex bank have attributed the improvement to a combination of foreign exchange reforms, tighter monetary policy, banking-sector recapitalisation and measures designed to restore confidence in Nigeria’s financial markets.
One of the most consequential changes has been the restructuring of the foreign exchange market.
The CBN moved towards a market-driven system based on the willing-buyer, willing-seller principle, while reducing segmentation across different FX windows.
It also introduced the Electronic Foreign Exchange Matching System to improve transparency and efficiency in interbank foreign exchange trading.
The Nigerian Foreign Exchange Code was subsequently launched to establish principles covering ethics, governance, execution, information sharing, risk management, compliance and settlement practices.
Together, the measures represented an attempt to move the foreign exchange market away from opaque practices and multiple exchange-rate arrangements towards a more transparent trading framework.
The rise in external reserves has also been supported by factors beyond monetary policy, including stronger crude oil earnings, increased capital inflows and diaspora remittances.
This distinction is important because the sustainability of Nigeria’s reserve position will ultimately depend on the country’s capacity to continue generating foreign exchange from multiple sources.
The banking industry has undergone its own major restructuring.
In March 2024, the CBN announced new minimum capital requirements for commercial banks, raising the threshold for banks with international authorisation to ₦500 billion, national banks to ₦200 billion and regional commercial banks to ₦50 billion.
The recapitalisation programme was designed to strengthen banks’ capacity to absorb shocks and position the financial sector to provide greater support for economic expansion.
Beyond banking and foreign exchange reforms, monetary authorities have maintained a tight policy stance in an effort to contain inflation and rebuild confidence in the naira.
The reforms have not been without costs or controversy.
Businesses and households have had to contend with exchange-rate adjustments, elevated borrowing costs and inflationary pressures during the reform period. The durability of recent gains will therefore depend partly on whether improvements in macroeconomic indicators eventually translate into stronger purchasing power, lower business costs and sustainable economic growth.
There are also external risks.
Changes in global oil prices, geopolitical tensions, foreign capital movements and domestic crude production could affect foreign exchange inflows and consequently the trajectory of Nigeria’s reserves.
Nevertheless, the movement from a financial system confronted by more than $7 billion in outstanding FX obligations to one with external reserves above $50 billion represents a significant change in Nigeria’s external financial position.
For Cardoso and the CBN, the next challenge may be more difficult than stabilising the immediate crisis: ensuring that the reforms produce durable confidence in the naira, sustainable price stability and a financial system capable of supporting productive investment.
The ultimate test of Nigeria’s monetary reset will therefore not be the size of the reserves alone.
It will be whether stronger external buffers, greater FX-market transparency and a recapitalised banking sector can translate into sustainable economic stability for businesses and Nigerian households.
