Abuja, Nigeria – Nigeria’s foreign exchange (FX) reserves declined by $1.31 billion in February 2025, despite a notable appreciation of the naira against major foreign currencies.
Data from the Central Bank of Nigeria (CBN) shows that the reserves fell from $39.72 billion on January 31 to $38.42 billion by February 28, marking a 3.3 percent decrease within the month. This drop is higher than the $1.16 billion decline recorded in January, reflecting ongoing external pressures on the country’s financial position.
A review of CBN data indicates a steady depletion of Nigeria’s FX reserves over the month. On February 3, reserves stood at $39.60 billion before falling further to $39.54 billion by February 4. By February 7, the reserves had slipped to $39.04 billion and continued their downward trend, reaching $38.88 billion on February 17. The decline persisted into the last week of February, with reserves closing at $38.41 billion by February 28.
Economic analysts attribute the drop in FX reserves to multiple factors, including CBN’s intervention in the market to stabilize the naira and manage exchange rate volatility. Nigeria’s dependence on imports for industrial goods and food supplies has led to higher FX outflows, while external debt servicing continues to put pressure on reserves. Despite recent gains in global crude oil prices, pipeline vandalism, oil theft, and production shortfalls have constrained Nigeria’s ability to maximize earnings from its oil exports.
Despite the decline in reserves, the naira strengthened against major currencies in February. Against the US dollar, the naira appreciated from N1,620/$ to N1,540/$, reflecting a 7.41 percent gain in the parallel market. The currency also gained against the British pound, rising from N2,000/£ to N1,910/£, a 4.50 percent improvement. Similarly, the naira appreciated against the euro, increasing from N1,660/€ to N1,550/€, marking a 6.34 percent gain. The official exchange rate remained relatively stable, closing at N1,496/$ on February 28, according to data from the Nigerian Autonomous Foreign Exchange Market (NAFEM).
The narrowing gap between the official and parallel market rates suggests efforts by the CBN to unify exchange rates and improve market transparency. However, the persistent decline in reserves, coupled with high FX demand and external debt obligations, poses challenges for Nigeria’s economic stability. Analysts caution that unless FX inflows improve, the country may struggle to sustain foreign exchange liquidity and meet external debt repayments without additional borrowing.
The CBN is expected to continue implementing policy measures to stabilize the foreign exchange market while ensuring adequate reserves to support economic growth.
