Nigeria’s FX Reserves Fall to 8-Month Low as Naira Makes Biggest Gains in All Markets

• Nigeria’s foreign reserves have hit an eight-month low amid foreign debt servicing and FX sales by the CBN
• The reserves, which stood at over $40 billion in December last year, plummeted as investors pulled investments to safer havens
• However, the Nigerian currency, the naira, recovered after days of depreciation, closing at N1,597.70 per dollar on Monday, May 12, 2025

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

Nigeria’s external reserves have plummeted to the lowest levels in April, the steepest in eight months, caused by foreign debt servicing and the Central Bank of Nigeria’s FX sales to defend the naira.

The gross reserves, which stood at over $40 billion in December 2024, shed almost $375 million monthly to $37.9 billion as of the end of April 2025.

Nigeria’s external reserves depleted by N2.9 bn

According to reports, the reserves are now down by $2.9 billion year-to-date and at their lowest level since August last year, showing CBN’s payment obligations.

The apex bank reportedly injected $200 million into the FX market to defend the naira from tariff effects and declining oil prices.

BusinessDay reports that analysts at FBNQuest Merchant believe that the portfolio investors’ slowing participation is among the reasons CBN increased dollar sales.

According to FBNQuest, the decline is a combination of external debt service and increased FX sales by the CBN.

Investors pull out to safer havens

Data from FMDQ FX turnovers shows that foreign portfolio investors continued to drop, declining to N0.5 billion in April 2025 from N0.6 billion, N2.0 billion in February, and N2.3 billion in January, showing investors’ flight to safe havens due to global uncertainty.

The development has left Nigeria’s financial regulators with little choice but to increase FX interventions to support market liquidity and ensure orderly market conditions.

However, recent data shows that the gross reserves rose for two consecutive weeks in May, posting modest gains of around $163 million as of May 6, 2025.

Analysts blame reserves decline on oil prices

Analysts have warned that fluctuating oil prices still put the reserves at risk as the apex bank may continue its periodic interventions.

As of the end of April, Nigeria’s total reserves covered 9.5 months of imports and 7.9 months when compared to the September 2024 balance of payments.

Meanwhile, the naira rebounded across all markets on Monday, May 12, 2025, after several days of depreciation.

Naira gains in all markets

Data from the Nigerian Foreign Exchange Market (NFEM) shows that the naira closed trading at N1,597.70 per dollar, up from N1,606 it traded on Friday, May 9, 2025.

The recent rally is the second day the naira has rebounded against the US dollar.

CBN data shows that currency dealers quoted the dollar at a high of N1,605 per dollar and a low of N1,595.

Experts say the naira’s rally is expected following the various FX interventions by the CBN.

The naira also appreciated in the parallel market on Monday, May 12, 2025, rising from N1,630 to N1,615 per dollar.

Subsequently, the gap between the official and black market rates grew by N20.

CBN releases new exchange rate

Legit.ng earlier reported that the naira has rebounded against the US dollar and other currencies after several days of depreciation in the FX markets.

The Nigerian currency has faced renewed volatility amid dwindling crude oil prices.

However, following multiple interventions and forex sales by the Central Bank of Nigeria (CBN), the naira has remained relatively stable.

Proofreading by Nkem Ikeke, copy editor at Legit.ng.

Source: Legit.ng