Nigeria’s external reserves plunge by $359.81m, raising concerns over 2025 economic outlook
Nigeria’s foreign exchange reserves sharply declined by $359.81 million in just seven days to settle at $40.56 billion as of January 13, 2025.
The steep decline, which follows unsustained high of $40.91 billion on January 7, highlights a downward trend as revealed in the latest data from the Central Bank of Nigeria (CBN).
Starting the year on relatively solid footing at $40.88 billion, the reserves initially hinted at stability, buoyed by a modest increase to $40.92 billion on January 6.
However, optimism quickly faded as daily contractions intensified, with the most pronounced slump—$192.39 million—occurring between January 10 and January 13.
This translates to a 0.88per cent depletion within a week, intensifying fears over Nigeria’s ability to maintain economic stability and meet external obligations.
As a key to currency stabilization, debt servicing, and import financing, foreign reserves play a pivotal role in safeguarding the economy.
Analysts say that the precipitous erosion of the forex reserves, if not arrested, might significantly constrain the CBN’s capacity to shield the naira from market volatility and sustain investor confidence.
According to analysts, the factors fueling this depletion are elevated import costs, increasing external debt repayments, and foreign exchange market interventions to stabilize the naira. Compounding the issue, weak export diversification has stoked higher demand for dollars, amplifying the immense pressure on reserves.
Despite a temporary boost in December 2024—driven by a $591.78 million inflow from the government’s $2.2 billion Eurobond issuance—the recent sharp decline raises questions about the resilience of such stopgap measures.
This unsettling trend underscores the urgency for comprehensive economic reforms to fortify Nigeria’s financial stability. Without decisive action, the nation risks further jeopardizing its economic prospects and its capacity to navigate the challenges of 2025 and beyond.
