Nigeria’s gross foreign currency reserves have contracted by $2 billion since the beginning of 2025, underscoring ongoing macroeconomic adjustments as the country navigates evolving fiscal and monetary dynamics.
Data from the Central Bank of Nigeria (CBN) reveal that foreign reserves, which stood at $40.88 billion on January 2, 2025, have declined to $38.88 billion as of February 17, 2025.
The depletion comes despite significant external funding secured in 2024, including a $2.2 billion Eurobond issuance, a $900 million domestic bond, and a $750 million tranche from a World Bank loan package.
While foreign reserves have weakened, the domestic currency has exhibited resilience, bolstered by a recalibrated inflation metric.
The National Bureau of Statistics (NBS) recently rebased its Consumer Price Index (CPI) methodology, resulting in a January inflation rate of 24.48 per cent—a notable decline that shifts real interest rates into positive territory.
“The revised inflation methodology offers a more accurate depiction of price movements,” analysts at Coronation Research observed. “This shift could reinvigorate investor confidence, particularly in fixed-income securities.”
With the Monetary Policy Committee (MPC) set to convene on February 19–20, expectations lean toward maintaining the benchmark interest rate at 27.50 per cent, allowing policymakers to assess the implications of rebased inflation figures and exchange rate stability before making further adjustments.
Nigeria’s external debt obligations remain a key consideration for fiscal planners. Analysts at Vetiva Research high – light the nation’s modest organic reserve buildup from oil exports, noting that much of the reserve accumulation stems from multilateral inflows, external debt issuances, and foreign portfolio investments.
Meanwhile, Cardinal – Stone Research projects that Nigeria’s annual debt servicing costs, including Eurobond maturities and coupon payments, could average $2.24 billion over the next decade, reinforcing concerns over fiscal sustainability. dit rating agency Fitch Ratings, which reaffirmed Nigeria’s ‘B-’ longterm foreign currency issuer default rating with a positive outlook in No – vember 2024, cited high inflation, hydrocarbon dependence, and weak net foreign-exchange reserves as key constraints.
However, it acknowledged ongoing reforms aimed at enhancing policy coherence and reducing macroeconomic distortions.
“Forecasting the CBN’s Net Foreign Assets is critical,” analysts at Coronation Research emphasised. “An optimistic scenario in 2025 could see increased U.S. dollar supply to the NAFEM market, strengthening the naira and mitigating imported inflation.”
