Nigeria’s Foreign Reserves Reduce by $359.81 Million in One Week

Confidence UbaniJanuary 17, 20251 Mins read372

Foreign Currency Stack| Credit: Selensergen

Nigeria’s foreign exchange reserves have dropped by $359.81 million in one week, settling at $40.56 billion on 13 January 2025. This decline came after a peak of $40.91 billion on 7 January, according to data from the Central Bank of Nigeria (CBN).

At the close of 2024, reserves stood at $40.88 billion. There was relative stability as the new year began. Reserves briefly rose to $40.92 billion on 6 January but began to decline the next day. On 8 January, they fell to $40.85 billion, a daily loss of $60.31 million. By 9 January, reserves dropped to $40.80 billion, losing $49.15 million.

The downward trend continued, with reserves reducing to $40.75 billion on 10 January, a loss of $50.35 million in a single day. The most significant drop occurred between 10 and 13 January, when reserves fell to $40.56 billion, losing $192.39 million over three days.

This steady decline, totalling a 0.88 per cent decrease in one week, raises concerns about its causes. Rising import bills, external debt repayments, and the CBN’s efforts to stabilise the naira are likely factors. Nigeria’s heavy dependence on imports and limited export diversification has added more strain.

Foreign reserves are vital in stabilising the economy and supporting the naira. A continued decline could further weaken Nigeria’s ability to meet international obligations and support the naira.

The naira’s downward trend is a key factor affecting the country’s economic stability. The parallel market fell to N1,670 per dollar on 15 January 2025 from N1,660 per dollar the previous day. The official market quoted it at N1,550 per dollar on 15 January 2025. Since foreign exchange controls were relaxed in 2023, the naira has lost about 70 per cent of its value against the dollar. This has driven up the cost of goods and services, contributing to the hardships experienced by Nigerians.

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