Market News

From Adanna Nnamani, Abuja

Nigeria’s foreign exchange reserves plummeted by $1.31 billion in February 2025, declining from $39.72 billion on 31st January to $38.42 billion by the end of the month.

This 3.3% decrease reflects ongoing external challenges for the nation, even as the naira has shown signs of recovery against major currencies.

According to data released by the Central Bank of Nigeria (CBN), the month of February saw a steeper decline in reserves compared to January, when they fell by $1.16 billion. This continuous downward trend raises concerns about Nigeria’s financial stability, particularly in light of its substantial external debt obligations and dependency on imports for critical goods.

Throughout February, Nigeria’s foreign reserves exhibited a consistent decline. They stood at $39.60 billion on 3rd February, gradually decreasing to $39.54 billion by 4th February. This marked the beginning of a robust downward trajectory, ultimately reaching $38.41 billion by 28th February. Notably, the decline is attributed not only to external pressures but also to the government’s reliance on these reserves to facilitate essential imports and service external debts.

Market analysts suggest that while the CBN may be intervening to stabilise the naira and manage exchange rate fluctuations, the heavy drawdown of reserves continues to strain the country’s economic position.

In particular, Nigeria’s reliance on oil revenue, its primary foreign exchange earner, remains risky due to ongoing production challenges, pipeline vandalism, and oil theft, which have all hindered the country’s ability to maximise earnings from its oil sector.

Amid these challenges, the naira has nevertheless experienced an upswing in February. The currency appreciated against the US dollar, the British pound, and the euro in the parallel market, recovering from previous lows. The naira strengthened to N1,540/$, up from N1,620/$, marking a 7.41% appreciation against the dollar. In addition, it improved against the British pound, rising to N1,910/£ from N2,000/£, reflecting a 4.50% increase, while against the euro, it climbed from N1,660/€ to N1,550/€, achieving a 6.34% gain.

By the end of the month, the official exchange rate also stabilised slightly above N1,500/$, with the Nigerian Autonomous Foreign Exchange Market (NAFEM) reporting a closing rate of N1,496/$1. This stability in the official market signals efforts by the CBN to alleviate the gap between the official and parallel market rates, thereby creating a more transparent forex environment.