CBN Records N13.9 Trillion Loss as Nigeria’s Foreign Exchange Reserves Decline
- The Central Bank of Nigeria (CBN) has incurred a loss of N13.9 trillion as it tries to offset foreign currency liabilities
- The bank stated this in its 2024 financial report, stating that it redeemed legacy contracts with top US banks
- Available data shows that the loss more than doubled from N6.3 trillion in 2023 as the apex bank redeemed legacy transactions
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Central Bank of Nigeria (CBN) recorded a N13.9 trillion loss, about $9 billion, as it tries to settle overdue contracts and prune FX liabilities on its balance sheet and save the naira in 2024.
The loss more than doubled from N6.3 trillion in 2023 as the apex bank redeemed legacy transactions to reduce outstanding forex liabilities, lowering FX exposure and boosting reserves.
Source: Getty Images
CBN records a loss trying to defend the naira
In 2023, the bank published its finances to boost investor confidence and enhance transparency in its affairs and foreign exchange management.
According to reports, the development came as the bank aims to remove capital controls, enable the naira to trade freely and lure inflows to end dollar scarcity.
The bank’s financial reports reportedly raised concerns about the actual size of Nigeria’s external reserves and the apex bank’s capacity to support the naira, as it disclosed large deals with JP Morgan and Goldman Sachs involving foreign currency contracts for cash to support the government’s revenue.
CBN settles debts to foreign banks
Bloomberg reported that the CBN said in April that it has settled deals, including swaps and forward contracts, to bring Nigeria’s net foreign currency to $23 billion as of December last year.
As of April 30, 2025, Nigeria’s gross external reserves increased to $37.9 billion, the highest in three weeks.
The Nigerian currency, the naira, has lost about 71% of its value against the dollar since Bola Tinubu became president and embarked on foreign currency reforms.
Reports say liquidity management costs from the sale of high-yielding short-tenured fixed income securities meant to mop up excess naira, control inflation, and the exchange rate, increased to N4.5 trillion in 2024 from N1.5 trillion in 2023.
CBN said it is committed to external sector stability to ensure Nigeria is better positioned to meet its international obligations, stabilise the naira, and boost macroeconomic confidence.
The naira depreciates amid fall in oil prices
The naira’s position among global currencies is worsened by falling oil prices, which experts say is a threat to the country’s 2025 budget.
Oil prices have seen the biggest decline in almost four years after Saudi Arabia disclosed plans to produce more and expand its market share.
Nigeria’s Brent crude sold for $61.86 per barrel, while WTI crude slipped to $58.21, the lowest since March 2021.
The fall contrasts with the market’s performance experienced earlier this year, when prices were about $75 per barrel.
The shift has upset market dealers and shifted global trade dynamics after traders positioned themselves for potential supply disruptions due to the Middle East conflicts.
In early April, Saudi Arabia moved to increase its OPEC+ production in May.
Several members of the cartel will reportedly seek an increase in output for the second month in June as they meet on May 5 to discuss production plans.
Nigeria’s budget is in trouble
Experts have said that Nigeria’s 2025 budget hangs in the balance due to the drop in global oil prices and domestic crude production.
The government benchmarked the oil price at $75 per barrel, with a projected daily output of 2.06 million barrels.
Legit.ng previously reported that Nigeria’s crude oil production fell steadily from 1.495 million barrels per day in January to 1.465 million in February, with more drops occurring in March.
Source: Getty Images
The setbacks pose a threat to Nigeria’s economic stability, as oil accounts for the country’s export earnings and more than half of the government’s revenue.
Naira crashes against the US dollar
Legit.ng earlier reported that the naira depreciated slightly against the United States dollar in the official market.
Data from the CBN showed that the Nigerian Foreign Exchange Market (NFEM), the naira closed at N1,606 per dollar at the end of trading on Friday, April 4.
Friday's exchange rate is a 0.24% depreciation for the naira when compared to the previous day's closing rate of N1,602 recorded in the official market.
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Source: Legit.ng
