The Naira closed February 2025 with a significant 8.5% month-on-month (m/m) gain on the parallel market, settling at ₦1,490/$. However, the local currency depreciated by 1.7% on the official market, closing at ₦1,500/$, according to the Afrinvest Monthly Market Report.
The Central Bank of Nigeria’s (CBN) renewed efforts to stabilise the naira through consistent foreign exchange supply and liquidity tightening measures have played a key role in strengthening the local currency across different FX segments.
The CBN resumed payments for the verified portion of the $7 billion foreign exchange backlog, a move analysts believe contributed to the 3.2 per cent decline in Nigeria’s foreign reserves, which stood at $38.46 billion as of Thursday.
Afrinvest analysts stated that the decline in reserves could be linked to the apex bank’s intervention to stabilise the naira.
“In March, we anticipate the naira will maintain its positive performance across FX segments, supported by the CBN’s continued USD supply to Bureau De Change (BDC) operators and Deposit Money Banks (DMBs), provided there are no adverse market shocks,” the report projected.
According to Cowry Asset Research, Nigeria’s oil benchmark, Bonny Light crude, traded at $75.88 per barrel last week, shedding $2.36 (3.2%) week-on-week due to weakened global demand.
The lower oil prices have impacted Nigeria’s dollar inflows, contributing to a $240 million (0.61%) week-on-week decline in foreign reserves. This reduction highlights the persistent foreign exchange liquidity challenges facing the country.
Naira’s Performance Across Markets
Despite the pressure, the currency appreciated marginally at the official window, gaining ₦0.93 to close at ₦1,500.15/$. The parallel market also saw the naira strengthen by ₦5, closing at an average of ₦1,490/$ as demand pressure eased slightly.
Analysts expect the CBN to sustain its intervention in the foreign exchange market by tightening liquidity and enhancing forex supply mechanisms.
“In the coming weeks, we anticipate a continued battle for stability in the forex market as the apex bank intensifies efforts to defend the naira,” Cowry Asset Research noted.
However, experts warn that persistent challenges such as mounting debt burdens, declining foreign reserves, and high inflation rates could undermine the potential gains of ongoing foreign exchange reforms.
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