Nigeria’s FX Reserves Surge by $591.78m After $2.2bn Eurobond Auction Boost

Nigeria’s foreign exchange reserves increased by $591.78 million in the month following the government’s $2.2 billion Eurobond auction.

Data from the Central Bank of Nigeria (CBN) revealed that the reserves rose from $40.29 billion on December 2, 2024, to $40.88 billion by January 3, 2025, a 1.47% month-on-month growth.

The increase showed consistent accumulation throughout December with a modest rise in the first week after the auction.

By December 9, reserves had climbed to $40.376 billion, an $84 million increase within seven days. The pace of growth accelerated mid-month, surging from $40.525 billion on December 12 to $40.790 billion by December 19 within one week.

The reserves peaked at $40.884 billion with the bullish trend extending into early January.

The increase in reserves comes as Nigeria grapples with economic challenges like fiscal deficit and exchange rate volatility.

A year-on-year comparison shows that Nigeria’s reserves grew from $33.042 billion on January 3, 2024, to $40.884 billion on January 3, 2025.

The rise in reserves has been attributed to multiple factors, including the Eurobond proceeds, higher oil revenues, and the CBN’s strategic management of foreign exchange inflows.

Analysts have noted that the higher reserves position Nigeria to better manage external payment obligations, debt servicing and import financing.

In addition to bolstering reserves, Nigeria’s foreign exchange market also recovered while the naira appreciated by N125 against the dollar following the launch of the Electronic Foreign Exchange Matching System (EFEMS) on December 2, 2024.

CBN data showed that the naira strengthened by 8% within one month with the dollar quoted at N1,535/$ on January 3, 2025, compared to N1,660/$ on December 2, 2024.

The EFEMS, first announced by the CBN on October 3, 2024, is part of a broader reform strategy to enhance transparency and curb speculation in Nigeria’s foreign exchange market.

While the recent improvements signal progress, economic analysts have called for long-term measures to strengthen Nigeria’s fiscal foundation and reduce reliance on external borrowings.

They argued that the focus should be on diversifying revenue sources, enhancing export performance and implementing structural reforms to support sustainable growth.