Nigeria’s External Reserves Drop Below $40 Billion for the First Time Since June 2024

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Nigeria’s external reserves experienced a slight decline, dropping to $39.991 billion on January 23, 2025, down from $40.035 billion on January 20, 2025, according to the latest data from the Central Bank of Nigeria (CBN). This drop marks the first time since June 6, 2024, that the country’s reserves have fallen below the $40 billion threshold.

The CBN’s data, which was obtained by Newsflash Nigeria on Sunday, highlights the latest movement in the country’s external reserves, a key indicator for Nigeria’s foreign exchange market. The decline follows a period of relative stability, especially after the CBN governor had previously announced that Nigeria’s external reserves had surpassed the $40 billion mark in recent weeks.

Economic experts have weighed in on the decline, with some attributing it to rising foreign debt levels that have put pressure on Nigeria’s financial reserves. Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, cited the increasing foreign debt burden as a significant factor contributing to the recent depletion of the country’s external reserves. He noted that servicing the growing debt is impacting Nigeria’s ability to maintain a higher reserve level.

The external reserves serve as a crucial tool for stabilizing the Naira and ensuring liquidity in the foreign exchange market. A significant drop in reserves often signals potential challenges for the country’s currency stability and can lead to increased volatility in the forex market.

Despite the recent decline in reserves, the Naira showed some strength in the foreign exchange market, closing at N1,531.20 per dollar at the close of trading on Friday. This movement indicates that despite the external reserves dip, there is still some resilience in the Naira’s performance in the face of ongoing economic challenges.

Experts suggest that careful monitoring of both foreign debt levels and reserves will be essential for Nigeria to ensure sustained currency stability and manage its foreign exchange needs in the coming months.