Nigeria’s External Reserves Rise to $49.6bn on Strong Oil Receipts and Foreign Inflows

Nigeria’s external reserves rose to $49.6 billion in May 2026 as stronger oil receipts, improved export inflows and foreign portfolio investment supported the country’s dollar position.

Data from the Central Bank of Nigeria showed that gross external reserves increased by $1.2 billion month-on-month. The recovery reversed two straight months of decline, during which reserves fell by about $1.3 billion.

The rebound gives Nigeria a stronger external buffer as the country works to stabilise the naira, improve foreign exchange liquidity and rebuild investor confidence.

Why Nigeria’s External Reserves Increased

Stronger oil inflows drove much of the recovery in May.

Nigeria earned more from crude oil exports as production improved and global crude prices remained high. Since oil remains the country’s main source of foreign exchange, better oil receipts often strengthen external reserves.

Foreign portfolio investors also supported the reserve growth. Even with weaker global risk appetite caused by tensions in the Middle East, Nigeria continued to attract offshore investors into its fixed-income market.

High yields helped maintain that interest. At the latest Open Market Operations auction, stop rates averaged 20.13% for the 110-day and 138-day tenors. Those rates created attractive carry-trade opportunities for foreign investors seeking returns in naira assets.

What The Reserve Growth Means For The Naira

The stronger reserve position helped the naira gain ground in May.

In the official market, the naira appreciated by 0.2% month-on-month to N1,372 per dollar. In the parallel market, it gained 0.6% to N1,390 per dollar.

This improvement shows how stronger reserves can support currency stability. When reserves rise, the CBN gains more room to supply the foreign exchange market, meet external obligations and reduce pressure on the naira.

However, Nigeria still needs steady dollar inflows to keep the naira stable. Oil earnings, foreign investment, remittances and export proceeds will continue to shape the currency’s direction.

Why Import Cover Still Looks Strong

Nigeria’s reserve cover also improved after the May rebound.

The country’s reserves covered 13.8 months of merchandise imports, based on the 12 months to December 2025. When imported services are included, reserves covered 9.5 months.

This level of import cover matters because it gives investors and trading partners more confidence in Nigeria’s ability to meet foreign payment obligations.

A stronger reserve position also reduces fears of immediate external pressure, especially at a time when many emerging markets face tighter global financial conditions.

How Nigeria Compares With Other African Markets

Reserve trends across major African markets were mixed in May.

South Africa’s international liquidity position fell by $29 million month-on-month to $73.5 billion. Lower gold valuation effects and higher external foreign exchange obligations contributed to the decline.

Egypt, however, recorded another increase in its net external reserves. Its reserves rose by $125 million month-on-month to $53.1 billion in May. High domestic interest rates continued to attract foreign exchange inflows into the country.

Nigeria’s rebound places it in a better position than in the previous two months. Stronger oil receipts and portfolio inflows helped improve its external account at a time when investors continue to watch currency stability closely.

Expert View: Why The Rebound Matters

From a market strategy perspective, Nigeria’s reserve rebound sends a positive signal to investors.

Rising reserves can reduce concerns about foreign exchange shortages. They can also improve confidence among foreign portfolio investors who want assurance that they can enter and exit the market without severe dollar supply problems.

For the naira, stronger reserves can help limit volatility if inflows remain steady. But the recovery must continue for the market to feel a lasting impact.

The biggest concern is the source of the inflows. Nigeria still relies heavily on crude oil earnings and short-term foreign portfolio inflows. Oil prices can fall quickly, while portfolio investors can exit when global rates or risk sentiment change.

This means Nigeria needs stronger and more durable foreign exchange sources. Non-oil exports, foreign direct investment, diaspora remittances and local production must play a bigger role if the country wants long-term reserve stability.

Why High Yields Are Still Attracting Investors

Nigeria’s high interest-rate environment continues to attract offshore investors.

Foreign portfolio investors often look for markets where they can earn strong returns. Nigeria’s OMO stop rates above 20% make naira assets attractive, especially for investors willing to take currency and market risk.

This inflow supports reserves in the short term. It also helps improve foreign exchange liquidity.

But high yields come with a cost. They can raise borrowing costs for government and businesses. They can also make the economy more dependent on short-term capital, which may leave quickly during global market stress.

That is why Nigeria must balance investor attraction with long-term economic stability.

Outlook For Nigeria’s External Reserves

Nigeria’s external reserves may continue to rise if crude oil production improves, oil prices remain elevated and foreign portfolio investors keep buying naira assets.

Sustained offshore inflows could support the reserves further, especially if investors continue to find Nigeria’s yields attractive.

Still, the outlook depends on policy consistency, stronger oil output, calmer global markets and confidence in Nigeria’s foreign exchange reforms.

For now, the May rebound gives the economy a useful boost. It shows that Nigeria’s external position can improve when oil receipts rise and investors respond to attractive yields.

But the country must build a stronger reserve base that does not depend too heavily on crude oil and short-term foreign capital. That will determine whether the current rebound becomes a lasting improvement or just a temporary relief.