Nigeria’s foreign exchange reserves dipped to their lowest point in eight months at the end of April 2025, mainly due to ongoing debt repayments and active intervention by the Central Bank of Nigeria (CBN) to stabilize the naira.
The gross reserves, which had surpassed $40 billion at the close of 2024, declined by $375 million in April alone, settling at $37.9 billion—marking the fourth straight month of decline. So far in 2025, the reserves have dropped by a total of $2.9 billion, reaching levels last seen in August 2024.
This downward trend highlights the burden of foreign debt obligations and the CBN’s increased dollar supply to the forex market amid dwindling foreign investor participation.
CBN Steps in to Protect the Naira
In a bid to support the naira amid falling oil prices and market volatility, the CBN injected $200 million into the foreign exchange market. According to analysts at FBNQuest Merchant Bank, this was partly prompted by a drop in foreign portfolio investment (FPI), which left the central bank with the responsibility of maintaining market stability.
“This decline is tied to external debt repayments and stronger CBN intervention in the FX market due to weaker foreign investor presence,” FBNQuest noted.
Foreign Investor Exit Intensifies
Data from FMDQ shows that FPI inflows have been on a steady decline—dropping from N2.3 billion in January to just N0.5 billion in April 2025. The trend reflects a broader investor retreat toward safer global markets, fueled by economic uncertainty.
This shift has forced the CBN to intensify dollar sales to maintain market liquidity and prevent a deeper plunge in the value of the naira.
Signs of Recovery Amid Ongoing Risks
Despite recent losses, May brought a glimmer of hope. By May 6, the reserves posted a modest gain of $163 million, breaking the four-month losing streak. However, analysts caution that gains remain fragile due to persistent risks such as volatile oil prices, global inflation, and OPEC+ production decisions.
As of April’s end, Nigeria’s reserves were sufficient to cover 9.5 months of merchandise imports, and 7.9 months when including services, based on the most recent Balance of Payments data from September 2024.
“Early May indicators show a slight recovery, but underlying risks to reserves remain significant,” analysts warned.
CBN Governor Reaffirms Commitment to Stability
CBN Governor Olayemi Cardoso assured stakeholders that the central bank remains focused on transparency and market resilience. Speaking at the World Bank’s Nigeria Development Update, he emphasized the institution’s proactive stance in shielding Nigeria from more severe effects of falling oil prices and global trade disruptions.
“Thanks to our commitment to transparency and market confidence, Nigeria has only experienced mild impacts from global tariffs and oil market volatility,” Cardoso stated.
