The Nigerian naira appreciated further in the parallel (black) market on Wednesday, strengthening to ₦1,537 per US dollar. This marks a ₦8 gain from Monday’s rate of ₦1,545, narrowing the gap between the official and unofficial exchange markets to just ₦7. At the Nigerian Foreign Exchange Market (NFEM), the naira settled at ₦1,530.25 per dollar, despite a slight depreciation compared to Monday’s ₦1,518.88 rate.
The naira’s recent performance reflects the impact of improved dollar liquidity and reduced demand pressure in the FX market. Monday’s surge, which pushed the currency to a four-month high, was driven by enhanced supply and investor confidence, aided by ongoing reforms from the Central Bank of Nigeria (CBN). Although the naira weakened slightly in the official window midweek, the trend still points to gradual currency stabilization.
Nigeria’s improved FX market conditions have been supported by strong foreign portfolio investments (FPIs), which reached $5.03 billion in Q1 2025, according to FSDH Merchant Bank. As of June 27, the naira had only lost 0.2% of its value year-to-date, having peaked at ₦1,630 in April. The CBN continues to implement reforms aimed at boosting transparency and confidence in the FX system, reinforcing the stability witnessed in recent weeks.
Despite the recent gains, analysts caution that the naira still faces vulnerabilities, including potential capital outflows and fluctuations in oil output and prices. FSDH forecasts the currency will settle around ₦1,595 by the end of 2025. These projections consider ongoing fiscal and monetary policy adjustments, including efforts to stabilize inflation and manage external shocks.
The International Monetary Fund (IMF), in its recent Article IV report on Nigeria, stressed the need for a tight monetary policy stance and positive real interest rates to maintain FX market stability. The IMF advised allowing the naira to absorb external shocks while using targeted interventions to curb excessive volatility. With a shallow FX market and high exchange rate pass-through to inflation, the Fund also warned of the need for careful management of short-term foreign debt rollover and external risks.
Source: Business day