Nigeria's foreign exchange reserves experienced a significant decline in February 2025, dropping by $1.31 billion to $38.42 billion from $39.72 billion at the end of January. This represents a 3.3% decrease over the month, slightly higher than the $1.16 billion drop recorded in January.
The consistent decline throughout February reflects ongoing external pressures, despite the naira's notable appreciation against major foreign currencies during the same period.
The Central Bank of Nigeria's (CBN) interventions in the foreign exchange market, aimed at stabilizing the naira, have been linked to the depletion of reserves.
These efforts have had some positive impact, as the naira strengthened significantly against the US dollar, British pound, and euro in February. However, concerns remain about the sustainability of these interventions and their impact on Nigeria's ability to meet external debt obligations.
Nigeria's heavy reliance on imports, particularly of industrial goods and food supplies, continues to exert pressure on foreign exchange reserves. Additionally, challenges in the oil sector, including crude theft and pipeline vandalism, have limited forex inflows, further constraining the CBN's ability to bolster reserves.
These factors raise concerns about Nigeria's capacity to service its foreign debt and maintain investor confidence, potentially affecting its credit rating and access to international capital markets.
