Nigeria’s foreign exchange reserves shrank by $1.31 billion in February 2025, reflecting ongoing external pressures despite the naira’s recent surge against major currencies.
According to data from the Central Bank of Nigeria (CBN), reserves declined from $39.72 billion at the end of January to $38.42 billion by February 28, marking a 3.3% drop within the month. This decline was steeper than the $1.16 billion decrease recorded in January, underscoring continued strain on the country’s external reserves.
The persistent depletion has fueled concerns, as analysts suggest that the CBN’s interventions in the forex market—designed to stabilize the naira and boost liquidity—have come at the expense of reserve levels.
Throughout February, reserves consistently fell without a single day of recovery. The month started with reserves at $39.60 billion on February 3, slipping to $39.54 billion by February 4, initiating a downward trend. By mid-month, reserves had dropped further to $38.88 billion on February 17, continuing their descent to $38.41 billion by February 28.
The decline has been linked to Nigeria’s heavy reliance on imports, which exerts pressure on forex reserves. While global oil prices have strengthened recently, Nigeria’s struggles with crude theft, pipeline vandalism, and production challenges have limited the country’s ability to generate sufficient forex inflows from oil exports.
The shrinking reserves have also raised concerns about Nigeria’s ability to service its external debt. With significant foreign debt obligations, further declines could strain the country’s capacity to meet payments, potentially raising borrowing costs and affecting investor confidence. A lower reserve balance may also negatively impact Nigeria’s credit rating and access to international funding.
Despite these challenges, the naira gained significantly in February, marking its strongest monthly performance in 2025. By the end of the month, the local currency appreciated from N1,620/$ to N1,540/$, reflecting a 7.41% increase. It also strengthened against the British pound, climbing from N2,000/£ to N1,910/£ (4.5% increase), and improved against the euro from N1,660/€ to N1,550/€ (6.34% increase).
The official exchange rate followed a similar trend, stabilizing above N1,500/$ in the final weeks of February. Data from the Nigerian Autonomous Foreign Exchange Market showed the naira closing at N1,496/$ at the official window, narrowing the gap between the official and parallel market rates.
This trend suggests Nigeria could be moving toward a unified forex market, reducing speculative trading and arbitrage, which have historically fueled currency volatility.
