Nigeria’s foreign exchange reserves declined significantly in two weeks this January 2025, falling by $832.62 million between January 6 and January 21.
This is according to data published by the Central Bank of Nigeria (CBN) on its website.
Nairametrics observed that this is the largest drop in reserves since April 2024, raising concerns about the country’s external liquidity position.
CBN data shows that Nigeria’s gross external reserves stood at $40.92 billion on January 6, 2025. By January 21, the figure had declined to $40.09 billion, representing a 2.03 per cent decrease in just two weeks.
This sharp decline highlights the pressures on Nigeria’s reserves amidst ongoing currency market challenges and macroeconomic uncertainties.
The decline comes after about five months of relative stability and growth in the FX reserves.
Currently at a two-month low, the reserves may drop below N40 billion by the end of January if the decline trend persists.
Major trends in FX reserves
The data further reveals that the reserves experienced consistent declines during the period under review. On January 13, reserves fell below $40.6 billion for the first time in the month, dropping to $40.56 billion. The trend persisted as reserves slipped further to $40.42 billion on January 15, and by January 21, they reached $40.09 billion.
Key milestones during this period include:
- A drop of $167.1 million between January 10 and January 13.
- A $502.5 million decline from January 6 to January 13.
- A cumulative $832.62 million reduction between January 6 and January 21.
What you should know
This steep drop, reminiscent of similar declines seen in April 2024, could be attributed to several factors, including increased demand for foreign exchange for imports, external debt servicing, and capital flight.
- The decline comes as the Nigerian government continues to face significant fiscal and monetary challenges.
- The reduction in reserves may also limit the CBN’s ability to intervene in the foreign exchange market to stabilise the naira, which previously faced mounting pressure before December 2024.
- In April 2024, Nairametrics reported that Nigeria’s foreign exchange (FX) reserves have witnessed a significant downturn, plunging by approximately $2.16 billion in 29 days, amidst the Central Bank of Nigeria’s (CBN) robust efforts to stabilise the naira. Current figures from the CBN, as of April 15, 2024, reveal that the FX reserves are now positioned at $32.29 billion, a stark decline from $34.45 billion recorded on March 18, 2024.
- The CBN governor, Yemi Cardoso, blamed the previous decline in April 2024 on debt repayments and other standard financial obligations, rather than efforts to defend the naira.
