- EBC Financial Group says Nigeria has rebuilt confidence, but the question now is whether long-term investment, closer naira rates and deeper market trust support it.
Nigeria’s foreign reserves have climbed to about USD51 billion, a decade-plus high, according to Central Bank of Nigeria (CBN).
EBC Financial Group (EBC) notes that this reflects stronger investor confidence, but the second half may show whether it holds, as the build rests on three cyclical drivers: oil earnings, short-term foreign money and a narrowing official-to-street naira gap.
Reserves rose from about USD32 billion in April 2024, during a dollar shortage, to about USD51 billion now, near the CBN’s target. Much came from two cyclical sources, strong oil earnings and money chasing high-yielding naira assets, so EBC expects the pace to slow or reverse. Fitch Ratings, a major international credit rating agency, expects a marginal decline to about USD47 billion by the end of 2026, citing higher spending and external pressures.
David Precious, senior market analyst at EBC Financial Group, said,
“Nigeria’s reserve build is real but may not be durable yet, because nearly all of the new money is the kind that can leave quickly. Of the USD10.37 billion that came in over the first quarter, the overwhelming majority was short-term portfolio funds rather than long-term investment, so a shift in oil prices, global interest rates or confidence in the naira might pull a large part of it straight back out.”
Most New Money Can Still Leave Quickly
The composition of the foreign inflows explains the caution over how long the build can last. The country attracted USD10.37 billion in foreign investment in the first quarter of 2026, up 83.83% year-on-year, according to the National Bureau of Statistics (NBS).
Of that, USD9.86 billion or 95.09%, was portfolio money, largely short-term naira debt such as Treasury bills that investors can sell at the next auction, while foreign direct investment, the long-term kind that builds factories and jobs, was USD135.08 million, or 1.30%. Put simply, of each dollar coming in, about 95 cents can leave quickly and barely one cent stays.
That money supports reserves while it stays. Dollars brought in to buy naira assets add to market supply, letting the CBN hold more reserves and steady the naira.
It leaves when conditions change. Nigeria earns most of its export dollars from oil and gas, so lower oil prices mean fewer dollars, and as a member of the Organization of the Petroleum Exporting Countries (OPEC) it cannot simply produce more, output capped by quota and reduced by theft and ageing fields.
Higher global interest rates draw money toward safer returns abroad, and a weakening naira prompts investors to sell early.
When oil fell in 2016 and 2020, foreign investors withdrew and could not convert naira to dollars as supply dried up, leaving the CBN to clear more than USD7 billion in trapped obligations into 2024.
The Oil Boost is No Longer Certain
Oil looked like a dependable source of the dollars behind the reserves only months ago. Earlier in 2026, concern over disruption around the Strait of Hormuz lifted crude prices, and stronger receipts flowed in, with crude oil export earnings of USD8.11 billion in the first quarter in the CBN’s balance-of-payments data. That support is now easing.
The tension has subsided and Brent traded near USD72 on 29 June, down about 24% over the month, back to pre-conflict levels. With the price boost gone and output constrained, reserves are more exposed, leaning on non-oil earnings and investor patience rather than oil.
The Naira Still Trades at Two Prices
The naira has traded at two prices, an official rate and a higher parallel-market rate, and closing that gap into one trusted price is what many investors might watch most. Before committing funds, they may want assurance they can convert naira to dollars at a fair rate when they exit, and a wide gap revives the fear of being trapped that lingers from earlier shortages.
The gap has narrowed to roughly NGN20 to NGN30, with the CBN’s official rate near NGN1,380 per dollar on 26 June against parallel-market quotes around NGN1,400.
The International Monetary Fund (IMF) 2026 Article IV review urged Nigeria to depend less on this fast-moving portfolio money and to keep phasing out its multiple exchange-rate practices.
The CBN’s Foreign Exchange Manual, in force from 1 June, is intended to make the market clearer, though such rules build confidence only once investors can freely trade dollars at the posted rate.
What could Make the Build Durable
A few signs that may show the build turning durable include a smaller gap between the official and street naira rates, more long-term foreign investment, and steadier oil earnings.
A gap that stays small, now roughly NGN20 to NGN30, may mean investors trust the official rate and no longer need the street market.
A clear rise in foreign direct investment, only USD135 million last quarter against USD9.86 billion of short-term money, might mean lasting capital is replacing funds that can leave at the next auction.
Oil earnings that hold up, rather than sliding from the low USD70s, should help keep reserves steady, since oil and gas bring in most of Nigeria’s export dollars.
“Reserves built on money chasing high yields can fall as fast as they rose, as they did after the last two oil shocks, when investors left and the CBN spent years clearing a foreign-exchange backlog,” Precious added. “What holds through a downturn is slower money, direct investment, steady oil and non-oil export earnings and one credible naira rate, and that is the shift Nigeria has yet to make.”
