Nigeria’s foreign exchange (FX) reserves have dipped by $263.151 million, ending a remarkable 25-week accumulation streak, according to data from the Central Bank of Nigeria (CBN). The reserves fell to $45.21 billion as of December 17, 2025, following three consecutive days of outflows. This marks the first decline in half a year, reversing a growth trend that had pushed reserves to a six-year high.
The contraction comes after reserves peaked at $45.472 billion on December 12. While Nigeria’s buffers had been robust—covering 13.9 months of merchandise imports and 9.4 months when including services—the recent dip signals renewed pressures on the country’s external position amid rising FX demand. Analysts see this as a natural correction in the context of seasonal and market-driven demands.
Several factors contributed to the decline. FX inflows dropped 67% month-on-month to $2.0 billion in November, with foreign portfolio inflows falling sharply and foreign direct investment collapsing. Analysts have linked some of these reversals to the Capital Gains Tax (CGT). At the same time, the CBN settled large obligations in mid-December, including over N640 billion in debt repayments and conducted fresh OMO sales totaling N1.324 trillion, which likely drew on the reserve buffers.
Holiday-related FX demand also intensified the pressure. Seasonal travel, import settlements, and retail stockpiling typically push up dollar demand at this time of year. Despite this, Nigeria’s reserves remain significantly higher than the $40.19 billion recorded at the end of 2024, highlighting that the country still has a buffer against external shocks even as the naira faces modest depreciation.
Looking ahead, analysts expect continued festive season pressures on the naira, coupled with potential import-driven inflation. However, strong reserves, diaspora remittances, and Eurobond inflows are expected to cushion the currency. Market sentiment may remain cautious, with short-term selloffs possible across equities and tighter liquidity conditions as FX demand peaks into early 2026.
source: Nairametrics