The Central Bank of Nigeria (CBN) has announced that foreign exchange pressures in the country have significantly receded. This development comes as Nigeria's external reserves have reached $55.25 billion, the highest in 18 years. According to the CBN, the reserves are sufficient to finance 11.3 months of import of goods and services. The improvement in the external position has contributed to greater stability in the foreign exchange market.
The CBN's Monetary Policy Committee (MPC) meeting on Tuesday revealed that the country's current account surplus rose by 67.92% to $7.54 billion in the second quarter of 2026. This represents an increase from $4.49 billion in the first quarter. The balance of payments surplus also rose from $2.38 billion to $3.51 billion over the same period. These figures indicate stronger external-sector fundamentals and improved investor confidence.
CBN Governor Olayemi Cardoso attributed the improvement in Nigeria's external buffers to diaspora remittances, which have played a crucial role in strengthening the country's resilience. The CBN has introduced measures to deepen diaspora remittances, including the Non-Resident Nigerian Ordinary Account and Non-Resident Nigerian Investment Account. These accounts enable non-resident Nigerians to remit foreign earnings and manage or invest funds in Nigeria.
The CBN has also cut the benchmark interest rate, known as the Monetary Policy Rate (MPR), to 23% from 26.5%. According to the CBN, this decision was made to reset the monetary policy framework and recalibrate the policy corridor. The committee emphasized that the recalibration does not constitute a change in the current monetary policy stance but rather an operational reset to enhance the effectiveness of monetary policy.
Governor Cardoso clarified that the MPR reset does not constitute a monetary policy easing. He stated that the changes were intended to strengthen the transmission of monetary policy and reinforce the MPR as the primary signal of monetary policy. The CBN believes that the existing monetary policy transmission mechanism was not working as effectively as desired.
The improvement in Nigeria's external position has supported greater stability in the foreign exchange market and contributed to renewed confidence in the country's financial markets. Cardoso noted that the stability in the foreign exchange market is a key factor in attracting capital market investments. The CBN's previous restrictive policy measures have achieved their intended objectives, and the reset is designed to make the monetary policy framework work more effectively.
The CBN governor emphasized that the decision to reset the MPR was supported by Nigeria's macroeconomic stability, including lower inflation, improved external reserves, reduced foreign-exchange pressures, and stronger investor confidence. He cautioned against interpreting the MPR reset as an easing cycle, stressing that the policy stance remains restrictive. The CBN will continue to monitor the economy and adjust its policies as necessary to maintain stability.
Key points
- Nigeria's external reserves have reached $55.25 billion, the highest in 18 years.
- The country's current account surplus rose by 67.92% to $7.54 billion in the second quarter of 2026.
- The CBN's decision to reset the MPR to 23% does not constitute a monetary policy easing.
