Market News

The naira continued to show signs of stability at the start of the week, trading at N1,610 per dollar in the parallel market, also known as the black market, on Monday.

This reflects a modest gain of N5 when compared to the rate of N1,615 per dollar quoted on Friday in the same market. Information obtained from street currency traders and various online rate-tracking platforms confirmed the development.

One street currency trader in Lagos, who gave his name simply as Abubakar, attributed the reduced volatility and mild appreciation to a noticeable decline in the demand for dollars. He said, “The market has been calm lately. The rush to buy dollars is not as crazy as it was a few months ago. People are becoming more cautious, and I believe the CBN’s policies are beginning to have some effect.”

In the Nigerian Foreign Exchange Market (NFEM), the naira also recorded an appreciation of 0.3 per cent, closing at N1,580.44 per dollar on Friday, compared to N1,584.95 quoted on Thursday, according to data published by the Central Bank of Nigeria (CBN).

Afrinvest Securities Limited, in a weekly market update, reported that Nigeria’s foreign reserves increased by 0.6 percent on a week-on-week basis, closing at $38.6 billion as of May 22, 2025. The rise in reserves has been interpreted as a sign of improving macroeconomic fundamentals, supported by strategic interventions by the apex bank.

Despite these positive movements, the naira still recorded a marginal week-on-week depreciation of 1.1 per cent in the official market, settling at N1,580.44 per dollar, the report noted. Similarly, in the parallel market, the currency depreciated by 0.8 per cent over the same period, closing at N1,610 per dollar by the end of the previous week.

Nonetheless, analysts at Afrinvest remain cautiously optimistic about the near-term outlook for the currency. “Barring any significant short-term shocks, we expect the naira to maintain its current levels in the near term,” the firm stated in its weekly report.

Over the long term, however, the naira’s trajectory has been one of consistent depreciation. From N134.50 per dollar in May 2009 to N1,580.44 per dollar as of Friday, May 23, 2025, the currency has weakened by N1,445.94, a depreciation of approximately 91.5 per cent in the past 21 years.

Amid these dynamics, the CBN continues to reinforce its commitment to strengthening the financial system by focusing on external reserve management. Recent figures from the apex bank reveal a substantial increase in its Net Foreign Exchange Reserve (NFER), which stood at $23.11 billion by the end of 2024. This marks the highest level in more than three years and represents a dramatic improvement from previous years: $3.99 billion at the end of 2023, $8.19 billion in 2022, and $14.59 billion in 2021.

The gross external reserves also showed a positive trend, rising to $40.19 billion at the end of 2024, compared to $33.22 billion at the close of the previous year. The CBN noted that the NFER, which adjusts gross reserves by factoring in near-term liabilities, is a more accurate measure of the foreign exchange buffers available to meet immediate external obligations.

Commenting on these gains, Olayemi Cardoso, governor of the CBN, said that the improvement in the reserve position was the result of deliberate and well-coordinated policy actions. “What we are seeing is the fruit of consistent, focused policies that are aimed at restoring investor confidence and ensuring financial system stability,” he said. “We have made it clear that rebuilding confidence in our monetary system is a priority, and we are beginning to see the results.”