Nigeria's External Reserves Fall Below $50 Billion as Capital Flight Intensifies
The Central Bank of Nigeria (CBN) has disclosed a significant decline in the country's external reserves, which have now dropped below the $50 billion threshold. As of March 24, 2026, the reserves stood at $49.57 billion, down from a recent peak of $50.02 billion recorded just two weeks earlier on March 11, 2026.
This marks the seventh consecutive session of decline, according to official data from the CBN, highlighting sustained pressure on Nigeria's foreign exchange buffers. The sustained drop underscores the growing impact of capital outflows and structural challenges facing the nation's foreign exchange earnings capacity.
Current Account Surplus Narrows Amid External Pressures
Provisional balance of payments data published by the CBN reveals that Nigeria's current account surplus narrowed considerably in 2025, reflecting rising external pressures. The surplus fell to $14.04 billion in 2025 from $19.03 billion in 2024, though it remained above the $6.42 billion recorded in 2023.
The services deficit widened to $14.58 billion from $13.36 billion, driven by higher payments for transport, travel, insurance, and government services. Meanwhile, net outflows in the primary income account surged by 60.88% to $9.09 billion, reflecting increased dividend and interest payments to foreign investors.
The secondary income account, which captures remittances and official transfers, declined to $23.20 billion from $24.88 billion, as inflows from both official development assistance and personal transfers weakened. Despite this decline, diaspora remittances remained a critical source of foreign exchange support for the Nigerian economy.
Analysts Warn of Continued Pressure on Reserves
Ayodele Akinwunmi, Chief Economist at United Capital Plc, explained that Nigeria's foreign reserves, measured on a 30-day moving average, have declined despite higher oil prices because these have not translated into sufficient foreign exchange inflows to meet demand. He added that global uncertainty tied to the Middle East crisis has triggered a flight to safety from emerging markets, further weighing on reserves.
"Unless oil production improves and foreign capital returns, the reserves are likely to remain under pressure despite favourable oil prices," Akinwunmi cautioned.
Although geopolitical tensions have driven capital outflows from emerging markets globally, Nigeria has continued to record modest portfolio inflows, according to a report by the Financial Markets Dealers Association.
Mixed Outlook for the Naira Exchange Rate
Ayodeji Ebo, Managing Director and Chief Business Officer at Optimus by Afrinvest, noted that higher oil revenues could help stabilise the naira by boosting foreign exchange inflows and strengthening reserves. However, he cautioned that persistent inflationary pressures and rising global risk aversion could still trigger capital outflows, potentially weakening the currency.
Ebo added that volatility in the parallel market could widen exchange rate gaps, with implications for remittances and import costs. Earlier projections presented by Yemi Kale, Chief Economist at the Africa Export-Import Bank (Afreximbank), suggested the naira is expected to trade within the N1,350 to N1,450 range against the US dollar in 2026.
Kale's scenario-based estimates for the USD/NGN exchange rate factored in variables such as oil prices, foreign exchange inflows, inflation patterns, and the consistency of economic policies. The continued decline in external reserves adds further complexity to Nigeria's foreign exchange management challenges as the country navigates global economic uncertainties and domestic structural issues.
