Is Nigeria’s FX Reserves Surge A Monetary Triumph or Minskyan Mirage of Stability?

By Chinedu Okoye 

The Net FX Reserves Surge:

Nigeria’s gross external reserves recently hit about $50.45 billion as of mid-February 2026, a 13‑year high, which alone is remarkable however even more striking, net reserves jumped from roughly $3.99 billion at end‑2023 to $34.80 billion by end‑2025, a 770+% increase in two years. 

This extraordinary two-year rise is attributable mainly to the data-driven policies and a combination of bold exchange rate reforms (Naira float) and favorable external conditions. Lower developed market sovereign Bond yields, increasing the yield differential, thereby attracting foreign investors participation. 

(Source CBN Database)

Other factors are only just recently coming into to play as the CBN Governor credits the rise in FX reserves to stronger oil earnings, improved transparency, and booming remittances. Indeed, by late Feb 2026 Nigeria could cover almost 9.7 months of imports with these buffers. 

(Source: CBN)

Such gains have not only raised investor confidence but has also helped steady the naira: the USD/NGN rate strengthened from roughly N1,500 in early January to about N1,377 by early March 2026. 

(Chart from Investing.com)

At the same time, Brent crude oil traded near $60–$80, well above Nigeria’s $64.8 budget benchmark. In effect, high oil prices and ramped‑up exports could provud a fiscal and FX cushion for the government.

However this hasn't been a Crude story, but a Policy one, as the Cardoso led CBN implemented disciplined data-driven policies that have helped eliminate FX scarcity and market segmentation, captured more inflows through the official channels and unified market determined rates.

Unified, Market‐Driven FX Policy:  

A key factor was the CBN’s move to a single, market‐determined exchange rate. Since mid-2023, Nigeria abolished multiple FX windows and let the naira float freely.thisnrefiemnunified and restore confidence and liquidity to the formal market, eliminating arbitrage.

This encouraged remittances and FPIs. The result was a more transparent FX market, which encouraged remitters and exporters to transact through official channels.

Robust Diaspora Inflows:  

Diaspora remittances have surged under tighter IMTO regulations and lower foreign exchange friction. Governor Cardoso specifically notes “increased remittance inflows” as a contributor to reserve accretion. As has ZE in our prior article on the FX reserve growth (Link)

World Bank data show Nigeria is one of the top global remittance recipients, but these flows remain concentrated in a few key countries. (We have previously warned in the article mentioned above, that any shocks or policy tightening abroad could dent these inflows.)

Oil Revenues and Dangote Refinery:

Nigeria’s oil sector has also been a game-changer. Elevated oil prices (Brent trading well above the budgeted $64.8/barrel in early 2026) boosted export earnings. Critically, the new Dangote refinery has begun to eliminate billions of dollars in monthly fuel imports, shifting a major chunk of FX demand.  

Aliko Dangote himself forecasts that by producing 650kbd of petrol, the refinery could appreciate the naira to about N1,100/$ (a ~25% gain) by 2026. In practice, every dollar saved on imports or earned from petroleum exports directly adds to reserves and strengthens the currency.

Fixed-Income Flows: 

Record yields on Nigerian government bonds and T‑bills have also attracted inflows from foreign portfolio investors. These inflows could continue to add to demand for Naira assets, supporting the currency and reserves, as the highest demand is at the longest end of the Nigerian Treasury Bills tenor - the 364-day notes. With shorter durations also in reasonable demand.

As noted by analysts, strong oil receipts and high yields together would “support currency stability” despite global uncertainties. A look at the charts above would suggest that, improvements in oil revenue and FX inflows had come hand in hand with a strengthening naira.

Cardoso's CBN 's Triumph and Vulnerability: 

Taken together, these factors have engineered a powerful turnaround in Nigeria’s external accounts. However, from a Post-Keynesian/Minsky perspective, which Zero Equilibrium Economics is anchited in, this stability may mask lurking fragility.

This is cause economy remains heavily import-dependent, so a sustained Naira recovery can help moderate inflation via exchange-rate pass‑through, or stock reinfltionary concerns.

The Instability in Stability:

The stability found in the Naira is itself unstable, per Minskian ideology as the Bank is still heavily reliant on a few volatile inflow which is risky given that oil revenues and remittances –domunate, with no sizeable amount of FDI incoming.

More so, slower growth in the US or Europe, India, Germany, or any oil market shock could reverse course. 

Minsky’s insight tells us that prolonged calm often breeds complacency: policymakers must not fall into the “stability leads to instability” trap. This is as the very success of recent reforms might encourage looser fiscal or external policies, which could ultimately fuel renewed volatility.

Policy Implications and Recommendations: 

To sustain gains, Nigeria’s authorities should proceed with fiscal prudence and policy coordination. Monetary policy must keep a vigilant eye on potential hot money flows: indeed, the CBN has already “mopped up” excess dollars ($190m in late Feb) to prevent overshooting in naira appreciation. 

Meanwhile, the Finance Ministry should resist over-spending windfalls and instead invest in productive capacity (e.g. in agriculture and manufacturing) to diversify away from oil.  

Strengthening social safety nets and debt management will also help absorb shocks. In short, the current foreign-exchange bounty offers breathing room, but it should be used to build a more resilient economy – not to declare victory.

ZE Analyst Key Takeaways:

Nigeria’s foreign reserves have climbed to multi-year highs (net $34.8b in 2025, gross $50.4b by Feb 2026) thanks to exchange-rate reforms, remittances, and now high oil prices.

The unified “willing-buyer/willing-seller” FX regime has improved transparency and attracted inflows. The increased crude oil price above expectations could see external receipts combined with high local yields to support the naira.

Nevertheless, underlying vulnerabilities remain. Inflows are still concentrated and subject to external shocks. Continued fiscal and macroprudential discipline will be needed to prevent a Minsky-style flip from stability to crisis.