Nigeria’s foreign reserves have declined by $3 billion in under four months, slipping below $37.888 billion—the lowest level recorded in six months—as FX inflows weaken and the Central Bank of Nigeria (CBN) intensifies its market interventions.
Data from the CBN reveal that the nation’s net foreign exchange position now stands at approximately $23 billion, representing 60% of the total reserves. This suggests that only 40% of the reserves are currently encumbered.
The reserves’ downward trajectory is being linked to a mix of declining oil production, volatile global crude prices, and underwhelming government revenues in 2025. Analysts have flagged persistent macroeconomic and external uncertainties as key drags on fiscal performance.
In the first quarter, Nigeria saw strong FX inflows driven by foreign portfolio investors attracted to high yields on Treasury and OMO bills. However, recent shifts in global investment sentiment have prompted a wave of capital outflows from naira-denominated assets. The subsequent yield compression led to a tapering rally in the fixed-income market.
Adding to the pressure, the CBN has scaled back its OMO auctions to just one per month since February in a bid to reduce balance sheet costs. This move, while fiscally prudent, has further tightened dollar liquidity.
As foreign demand for the dollar surges and oil prices hover below $70 per barrel, Nigeria’s fiscal and current account positions are taking a hit. With offshore inflows slowing and FX demand remaining elevated, the naira faces renewed headwinds in the short term.
