Nigeria’s foreign exchange reserves experienced a significant decline in February 2025, as reported by the Central Bank of Nigeria (CBN). The reserves decreased from $39.72 billion on January 31, 2025, to $38.42 billion by February 28, 2025, marking a reduction of approximately $1.3 billion within the month.
This downward trend has raised concerns among economists and financial analysts, particularly in light of the naira’s recent appreciation against the US dollar. Despite the reserves’ decline, the naira strengthened by 8.5% in the parallel market during February, closing at ₦1,490 per dollar.
The juxtaposition of declining reserves and a strengthening naira presents a complex economic scenario. Typically, robust foreign exchange reserves bolster a country’s currency by ensuring the central bank can support it during periods of volatility.
The CBN’s continued interventions in the foreign exchange market, aimed at stabilizing the naira, have likely contributed to the depletion of the reserves. While these measures support the currency in the short term, sustained reserve depletion could limit the CBN’s ability to manage future economic shocks.
Financial experts advocate for a balanced approach, emphasizing the need to bolster foreign reserves through diversified revenue streams, such as enhancing non-oil exports and improving the business environment to attract long-term foreign investments.
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