Nigeria’s Central Bank is grappling with a dramatic drop in the country’s foreign reserves, even as the Naira demonstrates unexpected resilience in the face of mounting economic pressures. The latest data from the Central Bank of Nigeria (CBN) reveals that gross external reserves have fallen by a staggering $3.5 billion over the past six months, raising concerns about the nation’s ability to meet its international obligations and protect the value of the Naira.
At the close of 2024, Nigeria’s gross external reserves stood at a robust $40.877 billion—a level not seen in years. However, by late June 2025, the reserves had dwindled to $37.369 billion, marking a sharp and sustained decline.
The most alarming period came in June alone, when reserves fell by $1.07 billion in just under four weeks. This rapid depletion has sparked fears among analysts and policymakers alike, who worry about the country’s vulnerability to external shocks and its capacity to defend the Naira.
Why Are Reserves Falling So Fast?
Several factors are driving the decline:
Debt Repayments: Nigeria is facing a wave of debt maturities, particularly in the first quarter of the year, when the CBN is forced to settle obligations to foreign investors and creditors.
FX Market Interventions: The CBN has been actively intervening in the foreign exchange market to stabilize the Naira, often using dollars from reserves to clear backlogs and support the official market.
Oil Sector Woes: Despite relatively stable global oil prices, Nigeria’s oil production has been hampered by theft, pipeline vandalism, and aging infrastructure. This has limited the country’s ability to capitalize on oil revenues, which are the primary source of foreign exchange inflows.
Global Oil Price Volatility: Recent weeks have seen oil prices tumble, with Brent crude slipping below $68 per barrel and WTI crude dropping to $65.55 per barrel, down from highs of $77 and $73 respectively. This has further squeezed Nigeria’s earnings from oil exports.
The Naira’s Surprising Resilience
Despite the depletion of reserves, the Naira has shown remarkable strength. At the official market, the currency appreciated by 52 basis points to close at N1,539.24 per dollar, up from N1,547.36.
In the parallel market, the Naira gained 157 basis points to settle at N1,570 per dollar, from N1,595 the previous week.
Analysts attribute this resilience to “continued foreign portfolio inflows and improved FX supply from non-bank corporates and exporters”.
They also point to policy reforms and a more transparent foreign exchange market as key factors supporting the Naira’s stability.
“CBN’s published gross foreign reserves closed the week at $37.37 billion, down by $293.87 million or 0.78 percent week-on-week. We expect the Naira to remain relatively stable in the near term, supported by continued foreign portfolio inflows and improved FX supply from non-bank corporates and exporters. However, the moderate decline in gross external reserves and the relatively modest FX inflow from the CBN suggest that the market may remain sensitive to demand side pressures.”
The Bigger Picture: Nigeria’s Economic Outlook
Nigeria’s economic outlook remains mixed. On one hand, the country is benefiting from improved non-oil exports, with gas and non-oil exports rising significantly in the first quarter of 2025.
The balance of payments also showed a $3.73 billion surplus, thanks in part to the depreciation of the Naira and the ramp-up of domestic fuel production from the Dangote Refinery.
On the other hand, the persistent decline in reserves and ongoing oil sector challenges continue to cast a shadow over the economy.
Quote of the Day
“The recent fluctuations in Nigeria’s reserves and the Naira highlight the delicate balance between short-term stability and long-term economic health. While the Naira’s resilience is commendable, the real test will be whether Nigeria can sustain its reforms and attract the investment needed to rebuild its reserves and secure a brighter future.”
— Economic Analyst, Lagos
Nigeria’s foreign reserves are under intense pressure, but the Naira is holding its own—at least for now. The coming months will be critical as the CBN and the federal government work to stabilize the economy, attract investment, and address the structural challenges facing the oil sector. For ordinary Nigerians, the hope is that the current reforms will translate into lasting stability and prosperity. Stay tuned for more updates as the situation unfolds.
