After Two Months of Decline, Nigeria's FX Reserves Record Growth Again

• Nigeria's Foreign Exchange reserves have been on a downward trend since January 2025, causing worries to stakeholders
• Analysts say this was due to pressures from falling oil prices, CBN FX intervention initiatives, among others
• But the FX reserves suddenly changed trend last week, growing for the first time in nine weeks

Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.

After nine weeks of declining, Nigeria’s gross foreign exchange (FX) reserves have recorded a growth of about $12.06 million.

The FX reserves closed at $38.36 billion as of March 12, 2025, a modest recovery after more than two months of worrisome decline.

In February alone, the reserves declined by more than $1.3 billion, sparking worries in the financial community.

This modest growth offers some hope for recovery even as the reserves remain under intense pressure from the government’s foreign debt obligations, and declining oil revenues, among others.

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The Central Bank of Nigeria's (CBN) efforts to intervene in the foreign exchange market also put more pressure on the FX reserves.

Nigeria’s FX reserves decline

Recall that the FX reserves declined for straight 33 days as of February. This led to an almost $2 billion drop in the reserves, amid efforts from the Central Bank of Nigeria (CBN) to stabilise the naira.

Interestingly, this helped improve the naira value against the dollar and other major currencies for a couple of weeks in both the official and black markets.

FX reserves grow year on year

The Sun reports that the FX reserves closed at $38.35 billion as of March 6, 2025, marking a year-on-year increase of 12.73% from the $34.02 billion recorded in March 2024.

However, the year 2025 has presented challenges due to the increased forex demand and lower oil earnings, resulting in significant declines in the first two months.

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CBN's robust interventions have contributed to depleting the reserves, but have not yielded much effect on the naira, as the naira still depreciated by 1.3% to close at N1,537.50/$1.

The CBN is optimistic in its projections, expecting an increase in the FX reserves to be driven by increased crude oil output.

Analysts expect sustained pressure on the naira

Analysts from Cordros Research projected that given the current situation, there will be sustained pressure on the naira.

This pressure will be driven by concerns about oil receipts, lower oil prices, and reduced FX inflows from FPIs.

They however project that the CBN interventions would keep the naira from any sharp depreciation.

FX reserves hit five-month low

Meanwhile, Nigeria’s foreign exchange reserves have hit a five-month low, depleted by $138 billion as of February 5, 2025.

The balance of the reserves stood at $39.440 billion, the same figure as the October 25, 2024 figure.

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The development comes amid the rise in the naira’s value in the parallel segment of the FX market.

Nigeria's FX reserves declined by 3.3%

In related news, Legit.ng reported that Nigeria’s FX reserves have seen a major decline for the second consecutive month in February 2025.

Analysts have expressed concerns over the worrisome situation, particularly for an import-dependent country like Nigeria, which will constantly need to fall back on the FX reserves.

There are also suggestions that the latest CBN attempts to stabilize the naira may have something to do with the situation.

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

Source: Legit.ng