Photo caption: Forex
Nigeria’s foreign exchange reserves dipped by more than $2 billion from the beginning of the year to $38.88 billion, according to data from the Central Bank of Nigeria (CBN).
The gross external reserves balance settled at $38.88 billion this week on the back of a sustained increase in foreign obligations settlements. A review of the nation’s US dollar-denominated reserves movement showed the outflows occurred in just 40 days.
There have been successive weekly declines since the beginning of the year, when the gross external reserves was at $40.92 billion, its three-year high, bolstered by foreign borrowings.
Some analysts attributed the negative movement to the CBN’s aggressive FX auction sales to local banks to boost FX supply. In line with the pattern observed in the latter part of 2024, the authority resumes FX sales to banks in January to ensure the local currency stabilises against the US dollar.
Inflows into the reserves from oil have continued to be uncertain as a result of oil-backed loan deals sealed to boost net foreign reserves. The exposure, including derivatives and FX swaps, has remained a drag on the strong foreign reserves balance.
“We project usable foreign currency reserves (gross reserves minus reserves held for forwards) will increase slightly to about $32.6 billion in 2025 as imports remain subdued but export receipts hold up,” S&P Ratings said in its outlook. #Nigeria’s Foreign Reserves Fall by $2.04 Billion ECA, AfCFTA Enhance Cooperation for Effective Trade Implementation
