Nigeria’s FX reserves falls to $38.42 billion in February

• The Central Bank of Nigeria said Nigeria’s foreign exchange reserves fell to $38.42 billion in February
• The reserves consistently declined throughout February
• The decline in FX reserves comes amid the rebound of the naira against most convertible currencies

Nigeria’s foreign exchange (FX) reserves fell by $1.31 billion from $39.72 billion on January 31, 2025 to $38.42 billion on February 28, 2025.

According to data from the Central Bank of Nigeria (CBN), the figure showed a 3.3 per cent decline within one month.

The data revealed that the decline recorded in February is slightly higher than that of January 2025, when the reserves declined by $1.16 billion.

FX reserves fell consistently in February

An analysis of the data showed that Nigeria’s FX reserves steadily declined throughout February.

On February 3, the reserves stood at $39.60 billion from the $39.72 billion recorded at the end of January. By February 4, reserves had decreased further to $39.54 billion.

By February 7, Nigeria’s reserves declined to $39.04 billion, and further fell on February 10 to $39.27 billion.

In the second week of February, the FX reserves continued on the downward trajectory, reaching $39.15 billion on February 12 and further dropping to $38.88 billion by February 17.

By the third week of February, the reserves dropped to $38.72 billion on February 19 and $38.69 billion on February 21.

By the end of February, the reserves continued to decline, reaching $38.41 billion on February 28, representing a 3.3 per cent drop in one month.

FX reserves fall amid naira rebound

The decline in FX reserves comes amid the recent gains recorded by the naira against the dollar.

The naira saw a rebound in February 2025, as it appreciated against most convertible currencies including the US dollar, British Pound, and the euro in the parallel market.

As of the end of February, the naira appreciated against the US dollar by 7.41 per cent to N1,540/$ from N1,620/$.

The local currency also strengthened against the British pound by 4.50 per cent to N1,910/£ from N2,000/£. Against the euro, the naira appreciated by 6.34 per cent to N1,550/€ from N1,660/€.

At the official foreign exchange window, the naira stabilised slightly above N1,500/$ in the weeks leading up to February’s close before settling at N1,496/$ at the end of the month, according to data from the Nigerian Autonomous Foreign Exchange Market (NAFEM).

The exchange rate stability reflects the efforts of the Central Bank of Nigeria (CBN) to bridge the gap between the official and parallel market rates and ensuring a more transparent forex system.

As of February 28, 2025, the naira traded at approximately N1,500/$ in both the official and parallel markets, indicating a unified exchange rate market.

Factors driving decline in FX reserves

The steady decline of the FX reserves in February is likely driven by some factors and the activities of both the monetary and fiscal authorities.

One of these factors is the intervention of the CBN to support the naira, manage exchange rate volatility and inject liquidity into the official forex market.

Another factor is the government’s continued reliance on the reserves to fund critical imports and service external debt obligations.

Nigeria’s heavy dependence on imports for industrial goods and food supplies requires significant FX outflows to meet demands, which also contributes to the depletion of the FX reserves.

Also, the fluctuation in oil revenue, which remains Nigeria’s primary source of foreign exchange earnings, is another factor influencing the decline of the country’s FX reserves.

Though crude oil prices have seen a rebound in recent times, the challenge of crude oil production, including pipeline vandalism and oil theft, affects the country’s earnings from the oil sector, leading to constrained ability to build up FX reserves.

Net FX inflow surges by 245.9% in 1 year

Meanwhile, TheRadar earlier reported that net foreign exchange (FX) inflow into Nigeria soared by 245.9 per cent in one year as of November 2024.

According to data from the Central Bank of Nigeria (CBN)’s economic report, FX inflow rose to $5.95 billion as of November 2024 compared to the $1.7 billion recorded in November 2023.