Naira Slips Despite $44.7 Billion Reserves Surge As Year-End FX Demand Spikes
By FIDELUS ZWANSON
NIGERIA’S foreign reserves rose sharply to $44.7 billion in November 2025, marking one of the strongest external buffer positions in recent years. Yet despite the impressive accretion, the naira still faced seasonal pressure, sliding by 1.8% in the official market to close at ₦1,446.7/$.
Economists attribute the weakness to the usual year-end surge in foreign exchange demand driven by holiday travel, settlement of import bills, and speculative positioning. Analysts note that November–December typically puts short-term strain on the naira regardless of reserve strength.
However, this year’s depreciation remains modest compared to previous double-digit declines. Market watchers credit the Central Bank of Nigeria (CBN)’s reforms—greater transparency, tighter supervision of FX flows and banks’ net-open positions, and reduced arbitrage opportunities—with mitigating volatility.
Nigeria’s reserves have gained $3.8 billion in 11 months and rebounded by $7.5 billion since June’s low, largely boosted by the Federal Government’s $2.4 billion Eurobond, steady oil receipts, and resilient diaspora remittances. The Eurobond issuance not only refinanced a maturing $1.2 billion bond but also injected fresh liquidity.
Reserves now provide 13.9 months of merchandise import cover—far above IMF benchmarks—placing Nigeria among Africa’s strongest liquidity positions. Similar upward trends were observed in South Africa and Egypt, reflecting improved sentiment toward emerging markets.
Looking ahead, analysts expect reserves to remain broadly stable, supported by FX reforms, improved oil production, strong remittances, and reduced near-term external debt obligations. Risks remain, particularly from global financial tightening, oil-price swings, or domestic policy lapses. Still, Nigeria enters 2026 with stronger buffers and improved market confidence, even if structural reforms are needed to secure lasting naira stability.
