The naira experienced mixed performance across different exchange segments over the past week, reflecting the Central Bank of Nigeria’s (CBN) ongoing stabilization efforts.
Analysts noted that CBN forex interventions have slowed due to a decline in external reserves, which stood at $39.09 billion as of Thursday. This decline, which began in January, has continued into the current month.
In the parallel market, the naira appreciated significantly, strengthening to approximately 1,552/$ from 1,660/$ the previous week. Market players attributed the gain to improved investor confidence.
However, at the official Nigerian foreign exchange market, the naira weakened due to sustained demand pressure. According to the Meristem weekly report, it depreciated by 0.54% week-on-week, closing at 1,509.70/$ from 1,501.61/$.
Factors Driving Naira’s Performance
The President of the Association of Bureau De Change Operators, Aminu Gwadebe, expressed optimism about the naira’s appreciation. He highlighted multiple factors contributing to the improvement, including:
- Increased interbank forex supply to Bureau De Change operators as directed by the CBN, which has helped inject liquidity and reduce panic.
- Reduced forex demand linked to the Chinese holiday.
- The impact of the FX Code, which has enhanced market discipline and regulatory oversight.
- Renewed investor confidence in the CBN, especially after clearing the $7 billion forex backlog.
“The market, especially the interbank, is experiencing strong portfolio inflows. Negative perception, which had plagued the forex market, has significantly reduced, and confidence in the CBN has improved,” Gwadebe stated.
Projections for the Naira
Analysts at Cowry Assets Management Limited predict that the naira will remain relatively stable in the coming week, provided there are no major market disruptions. They emphasized that exchange rate fluctuations will continue to be shaped by market supply and demand dynamics.
Investment firm Comercio Partners, however, projects that the naira could weaken to around 1,700/$ by mid-year. In its 2025 macroeconomic outlook titled “Looking Forward to the Future,” the firm pointed to Nigeria’s reliance on fuel imports as a key factor driving dollar demand and naira volatility.
The report noted that Nigeria’s limited export capacity restricts sustainable dollar inflows, making short-term stabilization measures less effective. It emphasized that while interventions such as Eurobond issuances and CBN policies provide temporary relief, only coordinated monetary and fiscal strategies can ensure long-term currency stability.
CBN’s Commitment to Forex Stability
CBN Governor Olayemi Cardoso recently confirmed that the Federal Government had successfully cleared the $7 billion forex backlog following a forensic audit. Speaking at the launch of Nigeria’s Regulatory Policy Framework organized by the Presidential Enabling Business Environment Council, Cardoso expressed confidence that this move would ease foreign exchange constraints and facilitate fund repatriation for businesses, multinationals, and foreign investors.
“Decisive steps have been taken to clear the outstanding $7 billion forex backlog, ensuring that businesses and investors can repatriate funds seamlessly,” he stated.
