Nigeria’s foreign exchange buffers have come under renewed pressure as the nation’s gross external reserves plummeted by $1.3 billion within a single 30-day window.

This rapid drawdown comes at a critical juncture for the Central Bank of Nigeria, which has been aggressively deploying its reserves to defend the Naira and improve market liquidity.

Nigeria’s gross foreign reserves, which hit a multi-year peak of $50.02 billion on March 11 has moderated to $48.69 billion as at April 14, according to the Central Bank of Nigeria data on reserves movements. The foreign reserves position as at April 14 represents a decrease by $1.3billion in one month, when compared $49.97 billion was on March 13.

While the dip in Nigeria’s foreign reserves keeps the exchange rate relatively stable, it depletes the savings meant to protect the country against global economic shocks. The dip, fueled by a combination of heightened debt service obligations and sustained intervention in the official FX window, comes as the International Monetary Fund (IMF) warns that even a rally in oil prices won’t be enough to insulate the country from wider global volatility.

“While higher global oil prices are expected to support government revenues and provide some external buffer, the overall impact of the shock remains negative,” Petya Koeva-Brooks, deputy director in the IMF’s Research Department, noted at the ongoing IMF/World Bank Spring Meetings in Washington, D.C.

IMF noted that higher crude revenues offer some fiscal relief, but remain insufficient to shield Africa’s most populous nation from the mounting pressure of external economic shocks. It has trimmed Nigeria’s 2026 growth outlook to 4.1 percent from 4.4 percent.

Though, despite this monthly haircut of circa $1.3 billion, Nigeria’s foreign reserves position is significantly stronger than it was this time last year, when it hovered around $32 billion. With Brent crude trading well above budget benchmarks, the inflow from oil exports remains a strong buffer. Brent crude is trading at approximately $96.37 per barrel. The market is currently quite volatile, with prices swinging between $94 and $97 over the last 24 hours.

Crude prices dipped earlier on hopes that Pakistan-brokered peace talks between the US and Iran would reopen the Strait of Hormuz. When those talks hit a snag, prices spiked back toward $100. The slight rise in crude oil price on Thursday reflects a cautious market as traders wait to see if a second round of negotiations will actually happen. Though the ongoing US naval blockade on Iranian ports is keeping a risk premium on every barrel, as global supply remains tight.

While the reserves record decline sounds sharp, it follows a record-breaking rally where reserves hit a 13-year high earlier in the year. As part of efforts to improve liquidity in the foreign exchange market, Nigeria’s central bank in February opened its dollar tap to licensed Bureau De Change (BDC) operators, by approving weekly foreign currency sales of up to $150,000 to each.

CBN directed all licensed BDCs to purchase dollars from any authorised dealer bank at prevailing market rates, subject to compliance with existing operational guidelines, a measure aimed at deepening market efficiency and ensuring broader access to foreign exchange (FX) across the economy.

The naira strengthened in the official foreign exchange (FX) market on Wednesday, driven by improved liquidity conditions even as Nigeria’s external reserves extended recent decline, highlighting the delicate balance facing policymakers.

“Exchange rate movements can amplify domestic price pressures: heightened geopolitical risk may trigger capital outflows, weakening the naira and raising the local currency cost of imported goods,” Joseph Nnanna, Chief Economist, Development Bank of Nigeria, said recently in a report titled “Imported inflation, apex bank dilemma and the 2026 energy shocks”.

Data from the Central Bank of Nigeria (CBN) showed the local currency appreciated N1,343.74 on Wednesday compared to N1,343.76 on Tuesday at the Nigerian Foreign Exchange Market (NFEM).

Nigeria’s Eurobond market closed the week to April 10 on a positive note, with average yields declining by 33 basis points to 7.12 percent from 7.45 percent, as renewed investor demand lifted prices across maturities. The drop in yields signals stronger appetite for Nigerian sovereign debt in the international market, as investors increased purchases of existing bonds, pushing prices higher and borrowing costs lower for the government.