By Jemimah Wellington, JKNewsMedia Reporter
NIGERIA’s EXTERNAL reserves slumped to an eight-month low in April as the Central Bank ramped up dollar sales and foreign debt service obligations weighed on the balance.
Gross reserves dipped by nearly $375 million from March to $37.9 billion at the end of April, marking the fourth consecutive monthly decline.
This leaves the total down $2.9 billion since the start of the year—its lowest level since August 2024. The pressure came from the Central Bank of Nigeria’s aggressive support for the Naira amid dwindling investor confidence and global economic strain.
In a decisive move to protect the local currency against falling oil prices and tightening global financial conditions, the CBN injected $200 million into the foreign exchange market.
Analysts from FBNQuest Merchant attributed the dip to increased FX sales and foreign debt servicing amid reduced interest from foreign portfolio investors.
FMDQ market data shows a stark drop in FPI inflows, falling to N0.5 billion in April from N0.6 billion in March, and sharply lower than the N2.3 billion seen in January.
As international investors pull back, the CBN has been forced to absorb the slack, intensifying its dollar interventions to keep the market stable.
Despite the ongoing drain, early May data hints at a tentative rebound. Reserves have grown modestly by $163 million within the first six days of the month, buoyed by a shift in momentum.
However, the outlook remains fragile. Oil prices remain volatile, and analysts warn that any resurgence in market intervention could erode the recent gains.
As of April’s end, Nigeria’s reserves provided cover for 9.5 months of merchandise imports and 7.9 months when services were included, based on the Balance of Payments figures up to September 2024.
FBNQuest analysts cautioned that while May opened on a slightly firmer footing, Nigeria’s reserves remain vulnerable to global economic headwinds—particularly weak oil price projections, OPEC+ policy shifts, persistent inflationary pressure, and dampened global growth expectations.
