The Nigerian naira weakened against the US dollar on Tuesday due to a shortage of foreign currency. The exchange rate depreciated by 0.36%, with the naira trading at N1,506 per dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM). Transactions in the official market ranged between N1,490 and N1,515 per dollar, as intervention from the Central Bank of Nigeria (CBN) slowed.
In the parallel (black) market, where foreign exchange is traded more freely, the naira depreciated further, losing N30 to close at N1,580 per dollar. The local currency has been under pressure since Nigeria adopted a more flexible exchange rate system in June 2023.
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.
Financial analysts at Cowry Asset Limited expect the naira to continue its daily fluctuations but believe that CBN policies will help stabilize the currency in the long run.
