The Nigerian naira depreciated against the US dollar on Tuesday amid a foreign currency shortage. The exchange rate fell by 0.36%, with the naira trading at N1,506 per dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM). In the official market, transactions fluctuated between N1,490 and N1,515 per dollar, as the Central Bank of Nigeria (CBN) scaled back its intervention.
The Nigerian currency subsequently declined, shedding N30 to close at N1,580 per dollar on the parallel (black) market, where foreign exchange is transacted more freely. Since Nigeria implemented a more flexible exchange rate regime in June 2023, there has been pressure on the native currency.
Throughout 2024, changes in how the naira’s value is determined have led to significant depreciation. By December 2024, the exchange rate had weakened by 70%, dropping to N1,544 per dollar compared to about N900 per dollar in December 2023.
S&P Global, a major financial rating agency, predicts that the naira will remain relatively stable and trade between N1,625 and N1,650 per dollar over the next two years (2025–2026). The agency also forecasts that Nigeria’s usable foreign currency reserves—total reserves minus obligations for forward contracts—will rise slightly to around $32.6 billion in 2025. This prediction is based on expectations that imports will slow due to the weaker naira, while earnings from exports remain stable.
The CBN has introduced several policies aimed at strengthening the naira and restoring investor confidence. One of the most notable initiatives is the Electronic Foreign Exchange Matching System (EFEMS), a digital platform designed to improve transparency and efficiency in the FX market. This move has helped boost investor confidence and increase the inflow of foreign currency into Nigeria’s financial system.
Cowry Asset Limited’s financial analysts anticipate that the naira would continue to fluctuate daily, but they also think that CBN initiatives will eventually contribute to currency stabilisation.
