The Nigerian naira ended the week with a slight appreciation against the U.S. dollar, closing at ₦1,599.01/$1 in the official foreign exchange market, per Central Bank of Nigeria (CBN) data. This improvement from Thursday’s ₦1,599.99/$1 signals minor progress amid volatile intra-day trading, where the rate fluctuated between ₦1,597.00 and ₦1,603.50. The naira’s performance throughout the week demonstrated relative stability in the official market, though fluctuations persisted.
In contrast, the naira weakened slightly in the parallel market, where it was exchanged at ₦1,632/$1 on Friday, down from ₦1,625/$1 on Thursday. Data showed it started the week at ₦1,633/$1 and fluctuated mildly throughout. The depreciation was largely driven by increased dollar demand from importers. As a result, the gap between the official and parallel rates widened, raising concerns about underlying pressures in the foreign exchange ecosystem.
Despite the dual-market disparity, economic indicators show mild signs of recovery. Nigeria’s inflation rate declined slightly to 23.71% in April 2025, down from 24.23% in March, marking a modest but welcome shift. This easing in inflation offers temporary relief to consumers and businesses grappling with high living costs and weakened purchasing power.
Nigeria’s external reserves experienced their first sustained rise in 2025, increasing by $364 million between April 30 and May 14. The 0.96% boost, from $37.93 billion to $38.29 billion, is attributed to the CBN’s forex liberalization efforts, improved transparency, and liquidity interventions. The trend is seen as a positive signal for investor confidence and future forex market stability.
The direction of the naira and broader economic conditions now hinge on the upcoming CBN Monetary Policy Committee (MPC) meeting scheduled for May 19–20. Market watchers expect fresh guidance on interest rates and monetary strategy. At its last meeting, the MPC held the Monetary Policy Rate steady at 27.50%, and stakeholders will look for signs of tightening or easing to align with inflation trends and reserve movements.
Source: Nairametric