Summary

Nigeria’s external reserves story in 2025 and early 2026 has been, on its face, remarkable. Gross reserves touched a 17-year high of $50.45 billion in February 2026. The CBN disclosed a Net Foreign Exchange Reserve (NFER) of $34.80 billion at end-2025, a figure that exceeds the country’s entire gross reserves just two years prior. Governor Cardoso has rightly pointed to this as evidence of a fundamental improvement in Nigeria’s external position.

But the recovery rests on a foundation worth examining carefully. In this report, we introduce a third and more analytically rigorous metric; “Core Reserves” defined as net reserves further adjusted to exclude the stock of foreign portfolio investment (FPI) inflows parked in Nigeria’s short-dated money market instruments, such as the treasury bills and OMO bills that are yield-sensitive, carry-trade-driven (i.e. borrowing in a low-rate currency (USD) and investing in a high-rate currency (NGN) to capture yield differential), and repatriatable within days. We believe it deserves systematic investor attention, especially given the elevated geopolitical risk premium from the ongoing Middle East conflict.

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