In March 2025, the naira experienced a 2.5% depreciation against the US dollar in the official foreign exchange market. The Central Bank of Nigeria (CBN) data revealed that the naira closed the month at N1,536.82 per dollar, marking a loss of N37.84 compared to the beginning of the month when it was valued at N1,498.98. Despite the decline in value, the country’s external reserves remained unchanged, closing the month at $33.33 billion, down from $38.36 billion in early March 2025.
During the same period, Nigeria saw a slight decrease in direct remittance inflows, with $1.91 billion recorded for 2024, down 3.5% from the $1.98 billion in 2023. Additionally, debt payments rose to a four-year high, totaling N465 billion by the end of 2024, underscoring the government’s continued reliance on borrowing. In the parallel or black market, however, the naira gained N30, with the dollar trading at N1,550, reflecting a 1.9% appreciation compared to the previous week’s N1,580.
A shift in foreign exchange demand has contributed to some stability, as a significant portion of FX demand moved to the official market, reducing speculative activities. This transition, according to Bala Bello of the Monetary Policy Committee (MPC), is allowing market forces to influence the exchange rate more effectively, with expected positive outcomes for price stability. The revised FX management strategy, which includes the Electronic Foreign Exchange Matching System (EFEMS) and the Nigeria Foreign Exchange Code, has played a role in improving transparency and credibility within the market.
At the end of February 2025, Nigeria’s external reserves had shown a slight increase, rising to approximately $39.84 billion from $38.71 billion at the end of January 2025. This improvement was attributed to higher crude oil production, stability in the FX market, and reforms introduced by the CBN. These efforts, alongside the deregulation of the downstream oil sector and a reduction in petroleum imports, contributed to a positive outlook for portfolio inflows and overall economic stability.
Source: Business day