Naira Slightly Weakens Amid Summer Dollar Demand Surge, But Outlook Remains Stable
The naira experienced a minor depreciation across both official and parallel foreign exchange markets on Wednesday, largely due to a renewed uptick in dollar demand associated with summer travel. In the black market, the naira declined by 1.2%, falling from N1,532 to N1,550 per dollar — a loss of N18. Similarly, at the Nigerian Foreign Exchange Market (NFEM), the official rate slipped slightly from N1,533.18 to N1,534.52 per dollar, reflecting a marginal drop of N1.34.
Traders and analysts attribute the depreciation to increased demand from Nigerians planning international travel during the summer holidays. This seasonal demand has added pressure on the foreign exchange market. However, the naira’s performance has remained relatively stable over recent months, bolstered by a series of monetary policy measures introduced by the Central Bank of Nigeria (CBN).
A report by United Capital Research projects the naira to close 2025 between N1,490 and N1,520 per dollar, citing improved investor sentiment and policy-driven market confidence. Similarly, Coronation’s market outlook expects the exchange rate to remain within the N1,500–N1,600 band, supported by increased foreign portfolio investor (FPI) participation and sustained trust in CBN reforms.
Uche Uwaleke, a capital market expert, noted the growing convergence between the official and parallel market rates, with the naira trading between N1,530 and N1,537 in both markets. He emphasized that this near alignment is encouraging for investor confidence, especially in the latter half of the year. Despite the convergence, analysts at Renaissance Capital argue the naira is still overvalued by roughly 26% when compared to its historical real effective exchange rate.
While concerns about the naira’s overvaluation persist, the combination of exchange rate convergence, CBN reforms, and increased foreign investor activity may foster greater FX market stability moving forward. Analysts suggest that continued policy discipline will be essential to sustaining this momentum, especially as seasonal pressures like summer travel begin to taper off in the coming months.
Source: Business day