The Central Bank of Nigeria (CBN) has reassured the public that it will not devalue the naira further in 2025, quelling market concerns driven by a significant disparity between the official and parallel exchange rates. Instead, the bank plans to utilize $2.2 billion raised through a Eurobond auction to exit swap agreements, remove encumbrances on foreign reserves, and bolster the nation’s reserve levels, currently at $42 billion. This strategy aims to stabilize the naira within a band of N1,538–N1,580 and support its appreciation.
The $2.2 billion Eurobond proceeds represent a portion of the $8.8 billion subscribed during the auction, with the government channeling the funds to address fiscal deficits and support the 2024 budget amid persistent revenue shortfalls. Despite the market anticipating another devaluation to harmonize the exchange rates and reduce the N200 premium between the official and parallel markets, the CBN insists it will focus on long-term strategies rather than direct interventions. The bank has pledged not to engage in new swap transactions in the first quarter of 2025, aiming to restore liquidity and confidence in the foreign exchange market.
As of late 2024, the naira experienced significant fluctuations, with the official rate briefly reaching N1,700 before stabilizing at N1,580, while the parallel market lagged. The CBN plans to prioritize spot transactions at the interbank level and eliminate existing swap-related liabilities, anticipating that these measures will strengthen the naira and create a more stable exchange environment in early 2025.
