Market News

…hits all-time high of N1,419.06 in 13months after EFEMS

The naira recorded its strongest annual performance in over a decade in 2025, appreciating by more than 7% against the United States dollar, supported by wide-ranging foreign exchange reforms implemented by the Central Bank of Nigeria (CBN).

Data published by the apex bank showed that the local currency strengthened by 7.4% or N105.61 during the year to close at N1,435.75 per dollar on Wednesday, the final trading day of 2025, compared with N1,541.36 traded at the start of the year on January 2, 2025.

The positive momentum extended into the new year, with the naira hitting an all-time high of N1,419.06 on Tuesday, January 6, 2026, marking one year since the commencement of the Electronic Foreign Exchange Management System (EFEMS). CBN data showed that the currency appreciated by 0.7% or N10.24 from N1,429.30 quoted at the close of trading on Monday at the Nigerian Foreign Exchange Market.

On a year-on-year basis, the naira strengthened by 8.07% to N1,419.06, representing a gain of N114.54 compared with N1,533.60 quoted on the corresponding period of January 6, 2025, underscoring a sustained recovery in the foreign exchange market.

In the parallel market, also known as the black market, the naira traded flat at N1,490 per dollar, unchanged from the level recorded on Monday, the first trading day of the week.

Nigeria’s external reserves, which provide the CBN with capacity to intervene in the market and manage foreign exchange volatility, also improved significantly. Data published on the CBN’s website showed that reserves rose to $45.60 billion as of January 5, from $40.88 billion at the beginning of the year, reflecting improved inflows and easing pressure on the foreign exchange market.

Olayemi Cardoso, Governor of the CBN, said the foreign exchange market was largely paralysed when the current leadership assumed office, with a backlog of over $7 billion in unmet FX obligations undermining market confidence. He noted that the spread between the official and parallel market rates had widened to more than 60%, creating distortions and rent-seeking opportunities.

“Perhaps the most visible sign of renewed confidence in our economy is the transformation of the foreign exchange market,” Cardoso said. He explained that over the past year, the CBN has sustained the unification of multiple exchange-rate windows, while fully clearing the once-crippling FX backlog, restoring credibility and enabling businesses to plan with greater certainty.

According to him, the introduction of the Nigerian Foreign Exchange Code has established clear rules around transparency, ethics, governance and fair dealing among authorised dealers, while the deployment of EFEMS, powered by Bloomberg BMatch, has transformed FX trading through mandatory order submission, real-time regulatory visibility and improved price discovery. These reforms, he said, have reduced opacity and manipulation, restored discipline, and narrowed the gap between the official and parallel markets to under 2 percent from over 60 percent previously.

The CBN data showed that the premium between the Nigerian Foreign Exchange Market and bureaux de change rates narrowed significantly to about 2.11% as of December 9, 2025, from 5.92% in 2024, reflecting improved convergence across market segments. A similar trend was observed in November 2025, when the premium declined to about 2.17%.

The apex bank said ongoing reforms are expected to help sustain exchange-rate stability, while external reserves are projected to rise further. According to the CBN, reserves are forecast to increase to about $51.04 billion in 2026 from an estimated $45.01 billion in 2025, supported by reduced FX pressures, higher oil earnings, sovereign bond issuance and increased diaspora remittance inflows.

The CBN also noted that the Dangote Refinery’s expansion of its nameplate capacity to 700,000 barrels per day from 650,000 barrels per day in 2025, with a medium-term target of 1.4 million barrels per day, is expected to further reduce import dependence, support reserve accumulation and reinforce stability in the foreign exchange market.

Muda Yusuf, Director and Chief Executive Officer of the Centre for the Promotion of Private Enterprise, said exchange-rate stability was one of the most visible economic achievements of 2025.

He noted that the naira largely traded within the N1,440 to N1,500 per dollar range during the year, with periods of marginal appreciation helping to strengthen business confidence. According to him, improved stability helped ease imported inflation pressures and restored predictability to pricing, contracting and investment planning.