Market News

The naira maintained its recent trend of stability on Thursday as the foreign exchange (FX) market concluded the week’s four trading sessions at N1,553.11 per US dollar at the Nigerian Foreign Exchange Market (NFEM) window.

By the close of trading on Thursday, the naira appreciated by N12.35 to settle at N1,553.11, marking a gain of 0.8 percent compared to the N1,565.46 recorded on Wednesday, according to data released by the Central Bank of Nigeria (CBN).

The local currency also remained stable in the parallel market, where it held steady at N1,605 per US dollar, according to street traders operating in the informal FX segment commonly referred to as the black market.

Nigeria’s gross external reserves recorded a marginal decline of 0.2 percent, declining to $38.32 billion as of June 4, 2025, from $38.39 billion as of June 2, 2025, CBN data showed.

Olayemi Cardoso, governor of the CBN, attributed the sustained level of naira stability to the deliberate and disciplined reform measures implemented by the apex bank.

He noted that one of the most significant developments in Nigeria’s foreign exchange landscape in recent memory is the substantial narrowing of the gap between the official and parallel market exchange rates.

“The recent appreciation of the naira is a welcome development,” analysts at the Nigerian Economic Summit Group (NESG) said in May 2024. “However, the country continues to face the persistent challenge of FX shortage, despite Nigeria’s immense potential to increase productivity and non-oil export volumes, particularly in the agriculture and manufacturing sectors.”

NESG, a non-profit and non-partisan private sector-led think tank, emphasised that the pursuit of exchange rate stability remains one of the fundamental macroeconomic objectives for any economy. Nonetheless, it observed that many developing countries, including Nigeria, have consistently struggled to achieve this goal due to ongoing exchange rate volatility, often driven by both domestic and external macroeconomic pressures, consequently contributing to broader macroeconomic instability.

In Nigeria, the volatility of the exchange rate is further exacerbated by several structural factors, including the country’s heavy reliance on imports, limited foreign exchange earning sources due to its dependence on crude oil exports, illiquidity in the FX market, persistent high inflation, and speculative trading activities.

Since June 2023, the CBN has allowed the naira to trade more freely under a willing-buyer, willing-seller arrangement, as part of broader efforts to liberalise the FX market. In line with its evolving monetary policy framework, the apex bank has also shifted towards inflation targeting, rather than relying solely on traditional money supply controls.

In March 2024, the Central Bank announced that it had successfully cleared a backlog of $7 billion in outstanding foreign exchange obligations, a milestone seen by many as pivotal to restoring investor confidence, improving FX liquidity, and enhancing transparency in Nigeria’s external sector management.