Nigeria’s FX reserves fall by $1.16 billion in January as CBN boosts greenback gross sales to BDCs 

Nigeria’s overseas alternate (FX) reserves declined considerably by $1.16 billion in January 2025, wiping out the $592.58 million acquire recorded in December 2024.

The newest figures from the Central Bank of Nigeria (CBN) present that reserves fell from $40.88 billion on the finish of December to $39.72 billion as of January 31, 2025.

This marks the sharpest month-to-month decline since April 2024 and raises considerations in regards to the nation’s exterior liquidity place.

What does the information say 

• CBN reviewed by Nairametrics signifies a gradual decline all through the month, with reserves dropping from $40.88 billion on January 2 to $40.75 billion by January 10.
• The decline accelerated within the latter half of the month, falling under the $40 billion threshold on January 22 and shutting at $39.72 billion by month-end.
• A $1.16 billion drop represents a 2.84% decline in only one month, elevating considerations in regards to the nation’s capacity to maintain exterior obligations, together with debt repayments and import financing.
• The final time Nigeria skilled such a pointy drop in reserves was in April 2024, when reserves fell considerably.

In April 2024, Nairametrics reported that Nigeria’s overseas alternate (FX) reserves have witnessed a major downturn, plunging by roughly $2.16 billion in 29 days, amidst the Central Bank of Nigeria’s (CBN) strong efforts to stabilize the naira.

Present figures from the CBN, as of April 15, 2024, reveal that the FX reserves are actually positioned at $32.29 billion, a stark decline from $34.45 billion recorded on March 18, 2024.

The CBN governor, Yemi Cardoso, blamed the earlier decline in April 2024 on debt repayments and different customary monetary obligations, quite than efforts to defend the naira.

What you need to know 

The January decline follows the CBN’s elevated greenback gross sales to Bureau De Change (BDC) operators as a part of efforts to stabilize the naira amid ongoing foreign money volatility.

• Regardless of considerations, the CBN has maintained that its technique goals to revive confidence within the FX market by making certain liquidity on the retail finish.
• The CBN resumed greenback gross sales to BDCs in December, injecting overseas alternate into the retail phase to curb speculative assaults on the naira.
• In a round, the CBN granted BDC operators non permanent permission to buy as much as $25,000 weekly in FX from the Nigerian International Change Market.
• Underneath the directive, BDCs might buy FX from a single Approved Vendor of their alternative, supplied they absolutely fund their accounts earlier than accessing the market.
• The transactions will happen on the prevailing NFEM charge, and BDCs are required to stick to a most 1% unfold when pricing FX for retail end-users.

The association was to be in impact from December 19, 2024, to January 30, 2025.

Nevertheless, the CBN has prolonged the deadline for BDC operators to entry the NFEM for weekly FX purchases. In a round signed by Dr. W.J. Kanya, the Appearing Director of the Commerce & Change Division on the CBN on Monday, the apex bank introduced that the earlier deadline of January 31, 2025, has now been prolonged to Might 30, 2025.

This intervention has helped ease pressures within the parallel market, with charges step by step converging with the official alternate charge.

Nairametrics earlier reported that the naira closed January 2025 at N1,475/$1 on the NFEM, marking its strongest efficiency since June 2024.

The Nigerian foreign money was formally exchanged for N1,473 to a greenback on June 11, 2024, the strongest till January 31, 2025.

This represents a major acquire from its closing charge of N1,535/$1 on December 31, 2024, indicating a N60 acquire or a 3.91% improve month-on-month.