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Daniel Adaji
Nigeria’s foreign exchange reserves have dropped to a four-month low of $37.88bn as of April 16, 2025, marking a sustained downward trend that signals deepening pressure on the country’s external sector.
Data from the Central Bank of Nigeria (CBN) on Tuesday showed that the gross reserves declined by nearly $1.2bn in just two weeks, falling from $38.8bn on April 2. The reserves have now slipped to their lowest level since December 2024.
This decline coincides with a broader reduction in foreign exchange inflows. According to the CBN’s January 2025 Economic Report, total forex receipts fell to $9.63bn in January, down 5.31 percent from $10.17bn in December 2024. The drop was attributed mainly to weaker inflows through official channels.
“Net foreign exchange inflow stood at $4.79bn, compared with $5.01bn in December 2024, indicating a 4.49 per cent decrease,” the apex bank stated.
The CBN’s share of total inflows plunged to $2.33bn from $4.09bn a month earlier. In contrast, autonomous inflows—funds from private investors, exporters, and remittances—rose to $7.31bn, up from $6.08bn.
Autonomous sources have become increasingly vital for Nigeria’s forex earnings, especially amid declining oil revenues and policy uncertainty. Yet, risks persist. A recent PwC report warned that large-scale deportations of Nigerian workers from the U.S. could significantly reduce remittance inflows, which are key to household spending and fiscal stability.
In January, aggregate outflows also dipped to $4.84bn from $5.17bn. Outflows through the CBN accounted for $3.80bn, while private sector-driven outflows rose slightly to $1.04bn.
The pressure on reserves is further highlighted by the CBN’s net outflow of $1.47bn in January—much higher than the $70m net outflow in December. Meanwhile, autonomous sources posted a robust net inflow of $6.26bn.
Despite declining inflows, the naira showed some resilience in January, appreciating by 1.16 percent on average. It closed the month at N1,478.22 per dollar, gaining 3.90 per cent from December’s rate.
Market turnover also rose by 18.3 percent to $408.49m in January, indicating improved liquidity and investor confidence. But analysts warn this may not last.
PwC cautions that Nigeria’s forex outlook remains fragile, especially under the threat of U.S. policy changes such as the expiration of the African Growth and Opportunity Act (AGOA), higher tariffs, and sanctions on oil imports.
“If AGOA benefits are not renewed, Nigeria could lose significant trade privileges,” PwC warned.
To protect reserves and stabilize inflows, experts are urging the Nigerian government to diversify its forex sources, attract non-oil exports, and secure favorable trade agreements.
As the reserves fall and global uncertainties loom, the country’s ability to maintain currency stability and support imports will likely face more strain in the coming months.