Nigeria’s foreign exchange reserves dropped by $1.31 billion in February 2025, reflecting ongoing external pressures amid a stronger naira.
According to data from the Central Bank of Nigeria (CBN), the reserves declined from $39.72 billion on January 31, 2025, to $38.42 billion on February 28, 2025, marking a 3.3 per cent drop within the month.
The decline recorded in February is slightly higher than that of January 2025, when the reserves dipped by $1.16 billion.
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The decline comes at a time when the naira has recorded some gains against the dollar, leading to speculations about the central bank’s strategy in managing foreign exchange (FX) market liquidity and ensuring exchange rate stability.
A month of consistent decline
An analysis of the data reveals that Nigeria’s FX reserves experienced a steady and uninterrupted decline throughout February. The reserves stood at $39.60 billion on February 3, a slight drop from the previous week’s $39.72 billion recorded at the end of January. By February 4, reserves had decreased further to $39.54 billion, marking the beginning of a persistent downward trend.
By February 7, Nigeria’s reserves had slipped to $39.04 billion, and by February 10, they fell further to $39.27 billion. The downward trajectory continued into the second week, with reserves standing at $39.15 billion on February 12 and further dropping to $38.88 billion by February 17.
By the third week of February, reserves had weakened further, hitting $38.72 billion on February 19 and $38.69 billion on February 21. As the month came to an end, reserves continued to deplete, reaching $38.41 billion on February 28, representing a significant decline from where they started at the beginning of the month.
Likely drivers of the decline
Beyond any form of intervention that the CBN might be doing to support the naira, manage exchange rate volatility and inject liquidity into the official forex market, the government’s continued reliance on the reserves to fund critical imports and service external debt obligations likely contributed to the decline. Nigeria remains heavily dependent on imports for industrial goods and food supplies, requiring significant FX outflows to meet these demands.
