$46bn Reserves Boom: Relief for Markets, but Pain Persists for Nigerians

…Naira Stabilizes; Fuel Costs, Inflation Still Squeeze Households

By Peter Salami

Nigeria’s external reserves have climbed beyond the $46 billion mark for the first time in about eight years, reflecting improved foreign exchange inflows and tighter monetary management. However, economists note that the milestone, while significant for market stability, has yet to translate into meaningful relief for millions of Nigerians battered by fuel price hikes and a steep fall in the value of the naira following deregulation of the petroleum and foreign exchange markets.

Personal Assistant on Special Duties to the President, Kamorudeen Yusuf, yesterday in a statement cited data from the Central Bank of Nigeria (CBN). According to the figures, external reserves stood at $46 billion as of January 22, 2026, up from about $40.8 billion at the start of 2025 and $45.5 billion at the end of last year.

The statement attributed the steady accumulation to ongoing foreign exchange reforms and stronger inflows, including increased repatriation of export proceeds by the Nigerian National Petroleum Company Limited (NNPCL) and private exporters, alongside higher dollar-to-naira conversions by businesses operating under the liberalised FX regime.

“Reserves have risen by over $1 billion since December 2025 and gained more than $500 million in the first three weeks of January 2026 alone, signalling a turnaround from earlier volatility,” the statement said.

Analysts explain that stronger reserves improve the CBN’s ability to defend the naira against speculative attacks, smoothen volatility in the foreign exchange market and meet external obligations such as debt servicing and import financing. At current levels, Nigeria’s reserves are estimated to cover about 15 months of goods imports, providing a stronger buffer against external shocks as the country heads into a pre-election year.

However, despite the improved reserve position and relative exchange-rate stability in recent weeks, the economic benefits for ordinary Nigerians remain muted. Since the removal of petrol subsidies and the deregulation of the FX market in mid-2023, the naira has lost over 300 percent of its value, while pump prices of petrol have more than tripled. These shocks have cascaded through the economy, driving up transportation costs, food prices and the cost of basic services.

Economists note that while higher reserves may help prevent further sharp depreciation of the naira, they do not automatically reverse inflation already embedded in the system. Food inflation remains elevated, wages have largely stagnated, and household purchasing power continues to erode, particularly for low- and middle-income earners.

“Stronger reserves are good for investor confidence and macroeconomic optics, but they do not, on their own, reduce fuel prices or lower the cost of living,” one Lagos-based analyst said. “Until exchange-rate stability is sustained over time and domestic production constraints are addressed, Nigerians will continue to feel the harsh effects of deregulation.”

The statement nonetheless maintained that the rebound in external reserves underscores the growing impact of recent economic and FX reforms, reinforcing macroeconomic stability and supporting the Central Bank’s medium-term outlook of a $51 billion reserve position by the end of 2026.

For now, the reserve build-up offers reassurance to financial markets and international creditors. For many Nigerians, however, the real test remains whether improved macroeconomic indicators will eventually ease the daily struggle triggered by higher fuel costs, weak purchasing power and the lingering aftershocks of a liberalised currency regime.