Market News

Hope Moses-Ashike 

The naira has maintained relative stability in the foreign exchange (FX) market despite the drop in external reserves.

Nigeria’s gross external reserves declined by eight percent year-to-date to $37.84 billion as of April 28, 2025 from $40.88 billion at the beginning of the year, according to data from the Central Bank of Nigeria (CBN).

The naira has recorded appreciation since January, after the introduction of the Electronic Foreign Exchange Matching System (EFEMS) and the foreign exchange codes by the CBN.

At the Nigerian Foreign Exchange Market (NFEM), the naira has gained 3.8 percent of its value against the dollar in the last four months, closing at N1,599.70 on Tuesday compared to N1,661.12 on December 2, 2024 when transactions commenced on EFEMS.

The naira also appreciated in the parallel market, also known as the black market, gaining 3.2 percent or N52 year-to-date, as the dollar was quoted at N1,608 on Tuesday compared to N1,660 in January 2025.

The NAFEM window recorded an inflow of $735mn compared to $1.42bn in the previous week, a report by Coronation Merchant Bank Limited said.

The CBN accounted for 33.47 percent of the total inflows, while foreign portfolio investors (FPIs) were responsible for 11.99 percent. Non-bank corporates brought in 31.76 percent; exporters accounted for 21.17 percent, while other sources attracted 1.61 percent.

The World Bank Group said the weakest performing currencies over the past year were the South Sudanese pound, the Ethiopian birr, and the Nigerian naira, with reductions in value that exceeded 40 percent in 2024.

In its 2025 Africa Pulse, the World Bank said policy efforts are aimed toward a unified and market-determined exchange rate to make the naira more competitive. As a result of these policies, improved foreign exchange liquidity and reduced volatility have led to a more stable naira so far this year.

According to the Coronation report, the Naira gained 0.02 percent week/week against the US Dollar in the official spot market, closing at N1,599.55/US$1.

The 1-month forward rate closed at N1,650.54/$1. The three-month forward contract rate closed at N1,730.03/$1. The 6-month forward contract closed at N1,846.90/US$1 The 1-year forward rate closed at N2,074.22/US$1.

At the parallel market, the naira gained 0.31 percent against the dollar, closing at N1,599.55/US$1 on Friday (25th April ‘25).

Muhammad Sani Abdullahi, deputy governor for Economic Policy at the CBN, noted the sharp increases in foreign exchange turnover, emerging signs of disinflation, and strengthening external reserves. “With a market-determined exchange rate and a transparent, rules-based policy framework, confidence is gradually being restored in Nigeria’s economy,” he said during a high-profile global forum at Nasdaq MarketSite in New York on Thursday, April 17, 2025.

Addressing open economies, particularly emerging markets like Nigeria, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), urged the preservation of exchange rate flexibility to serve as a shock absorber. “In the event of unwarranted currency market volatility, these countries can find policy guidance in the IMF’s Integrated Policy Framework,” Georgieva said.