Wednesday, 05 March 2025 04:52

Nigeria's foreign reserves experience steady decline. Here’s the performance sheet since January 2025

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Key Highlights

- Total Decline: $1.31 billion (3.3%) in February 2025

- Starting Reserve: $39.72 billion (January 31, 2025)

- Ending Reserve: $38.42 billion (February 28, 2025)

- Decline Larger Than January: Previous month saw a $1.16 billion reduction

Reserve Trajectory: A Month of Continuous Descent

Early February Trend

- February 3: $39.60 billion

- February 4: $39.54 billion

- February 7: $39.04 billion

- February 10: $39.27 billion

Mid-Month Performance

- February 12: $39.15 billion

- February 17: $38.88 billion

- February 19: $38.72 billion

- February 21: $38.69 billion

Month-End Position

- February 28: $38.41 billion

Market Context

The persistent decline occurs against a backdrop of a strengthening naira, raising questions about the Central Bank of Nigeria's (CBN) foreign exchange market strategy. The steady reduction in reserves suggests ongoing external economic pressures and potential interventions to manage currency stability.

Potential Implications

1. Currency Management: The reserves decline might indicate:

   - Active dollar sales to support naira valuation

   - Efforts to manage exchange rate volatility

   - Responding to external economic challenges

2. Economic Indicators:

   - Potential pressure on foreign exchange liquidity

   - Continued challenges in foreign reserve accumulation

   - Need for strategic economic policy adjustments.

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