According to a report from the Central Bank of Nigeria (CBN), Nigeria’s external reserves experienced a notable decline of approximately $1.19 billion over the last three weeks. The reserves, which stood at $40.877 billion by the end of December 2024, dropped to $39.723 billion by January 31, 2025.
The decline in the country’s foreign currency reserves has raised concerns among financial analysts, especially as the CBN has not yet published the updated reserves data for the first few days of February. This drop in reserves comes at a time when the country’s currency, the Naira, has managed to maintain relative stability. As of February 3, 2025, the Naira remained below the N1,500 mark per US dollar, which has been a key point of interest for the market.
While the current stability of the Naira has been noted, the future outlook for Nigeria’s external reserves is not as optimistic. In a report by the Financial Derivatives Company (FDC), led by Bismarck Rewane, the company predicts a further decline in the country’s gross external reserves. The FDC’s forecast suggests that Nigeria’s reserves could fall by as much as 11.47 percent in 2025, reaching a total of $36.21 billion by the end of the year. By 2026, the reserves are expected to stand at $37.65 billion, down from a high of $40.9 billion in 2024.
The FDC’s projections also include an expectation for the Naira/Dollar exchange rate. According to their analysis, the exchange rate could average N1,586 to the dollar in 2025 and slightly improve to N1,575 in 2026. This would represent a reduction from the average exchange rate of N1,615 recorded in 2024.
