Market News

BY Hope Moses-Ashike & Wasiu Alli 

…Trades at 1,610/$ in black market

The naira is expected to maintain its steady momentum as the Central Bank of Nigeria (CBN) continues to roll out measures to ensure stability, but a substantial strengthening of the currency may be unlikely given the global uncertainty.

According to a weekly report by Cordros, a Lagos-based consultancy, the currency appreciated by 1.1 percent week/week to N1,585.00/$ last week, mostly supported by the CBN’s sale of $190.40 million to the market.

Data obtained from the CBN website show that the naira ended the week on a strong note, appreciating to 1,580.44/$1 on Friday, from Thursday’s closing rate of N1,584.95/$1, which marked its first depreciation following the monetary policy hold decisions.

“The naira is likely to stay stable in the short term, as global pressure remains contained amid easing trade tensions,” Codros said.

”However, any substantial appreciation appears unlikely, with FX liquidity still constrained by subdued foreign portfolio inflows amid persistent global uncertainty.”

Meanwhile, gross FX reserves rose for the fourth consecutive week, growing by $166.63 million w/w to $38.54 billion as of May 21 as the CBN continues to ensure it has enough buffers to maintain stability at the exchange rate market.

The stability of the naira is however returning lost confidence after the currency shed more than 40 percent of its value last year, enduring steep devaluation that’s now made it more competitive.

Olayemi Cardoso, CBN governor, said at the press briefing after the 300th MPC meeting that the country now has a competitive currency that will help to create opportunities for export growth.

Cardoso noted that the CBN would double down on reforms to ensure that the currency remains stable despite global tensions while maintaining price stability to anchor inflation expectations.

Naira trades at 1,610/$ in black market

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

This reflects a modest gain of N5 when compared with 1,615/$ quoted on Friday in the same market.

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.”

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.

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 percent 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, Cardoso said that the improvement in the reserves position is 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.”