Nigeria’s gross external reserves experienced a notable decline in the first half of 2025, dropping by approximately $3.5 billion as of late June, according to recent data from the Central Bank of Nigeria (CBN).
The figures reveal that the nation’s reserves decreased from $40.877 billion at the close of 2024 to $38.448 billion by the end of May, and further declined to $37.369 billion by June 26. This steady downward trend saw reserves fall by about $1.07 billion over a period of just under a month in June, starting from $38.391 billion on June 2.
Data from the CBN showed a week-on-week decline of $293.87 million, or 0.78%, signaling ongoing pressures on Nigeria’s foreign exchange reserves. Analysts from Coronation Research noted that while the Naira is expected to remain relatively stable in the short term, supported by foreign portfolio inflows and improved dollar supply from exporters and non-bank corporates, demand-side pressures keep the market sensitive.
“The moderate drop in reserves combined with limited FX inflow from the CBN suggests the FX market may continue to face volatility,” the analysts said in a note dated June 30.
Meanwhile, oil prices, a critical driver of Nigeria’s FX earnings, slipped significantly last week. Brent crude fell below $68 per barrel and WTI dropped to $65.55 per barrel, down from $77 and $73 respectively the previous week. This decline followed the easing of geopolitical tensions in the Middle East after a 12-day conflict between Israel and Iran, which saw a ceasefire announced by the U.S., calming the market and reducing risk premiums.
Despite the reserves decline, the Naira showed signs of resilience. On the official exchange market, the currency appreciated by 52 basis points to close at N1,539.24 per dollar, while the parallel market saw an even stronger gain of 157 basis points, ending at N1,570 per dollar.
CBN Governor Olayemi Cardoso emphasized the importance of the external reserves as a buffer against external shocks, noting that Nigeria’s reserves currently provide nearly 10 months of import coverage. He highlighted ongoing central bank initiatives aimed at boosting reserves through measures that enhance export capacity, encourage local production to reduce import dependency, and simplify foreign remittance flows from the diaspora.
“Our foreign exchange reserves provide a robust cushion against external shocks such as fluctuations in oil prices and global market volatility, thereby strengthening the Nigerian economy,” Cardoso said during a recent meeting with Airtel Africa’s management.
Looking ahead, market watchers remain cautiously optimistic. United Capital research analysts noted that while the Naira is likely to maintain its current stability given continued CBN interventions and foreign inflows, challenges such as debt servicing obligations, speculative activity, currency hoarding, and constrained FX supply may still exert downward pressure.
As Nigeria navigates these complex dynamics, the Central Bank continues to play a pivotal role in managing liquidity and safeguarding economic stability.
