Naira Holds Longest Stability Streak of 2025 as Dollar Weakens and Reserves Climb
The naira is experiencing its most prolonged period of stability this year, trading within a narrow range of ₦1,520 to ₦1,537 per dollar for nearly eight weeks, from mid-June to early August. This steady run marks a sharp contrast to earlier months of 2025, which saw wild fluctuations including a January rally, an April slump, and a May–June recovery. Market data shows that during this current stretch, daily movements have remained below ₦3 on most trading days—far calmer than the double-digit swings seen earlier in the year.
This period of calm is particularly striking given the summer holiday season, when demand for foreign exchange typically rises as Nigerians travel abroad for vacations, education, and shopping. Confidence has been further boosted by commercial banks reintroducing naira debit cards for dollar transactions, a move seen as a sign that Central Bank of Nigeria (CBN) reforms under Governor Olayemi Cardoso are gaining traction.
Analysts attribute the naira’s resilience to several factors, including a weaker US dollar in global markets, rising foreign reserves above $40 billion, and reduced speculative demand due to narrower gaps between the official and parallel market rates. Additionally, the CBN has accelerated the clearance of forex backlogs owed to banks, airlines, and manufacturers—freeing up market liquidity and improving investor sentiment.
Corporate adjustments have also played a role. Many Nigerian firms have reduced reliance on dollar-denominated inputs by increasing local sourcing, renegotiating payment terms with foreign suppliers, and adopting phased import strategies. At the same time, the CBN’s hawkish monetary policy—maintaining high interest rates despite falling inflation—has discouraged speculative dollar purchases and attracted short-term capital inflows that support the exchange rate.
For now, traders report that the market remains balanced, with supply and demand closely matched. However, they caution that the stability could be tested if oil prices drop, reserves decline, or the US dollar regains strength. Until then, the naira’s calm run stands out as one of the strongest signs of renewed confidence in Nigeria’s foreign exchange management this year.
Source: Nairametrics