Chinwendu Obienyi The naira showed significant strength, closing January 2025 at N1,474.78/$1, at the Nigerian Foreign Exchange Market (NFEM), marking its strongest level in seven months......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
This represents a 4.3% appreciation from the earlier rate of N1,535/$1in the month of December 2025.
It will be recalled that the naira had recorded 40.9% depreciation against the dollar in the official market despite notable growth in external reserves.
However, the December 2024 Business Expectations Survey (BES) conducted by the Central Bank of Nigeria (CBN) revealed that businesses anticipated a steady appreciation of the local currency in the coming months.
“Businesses expect the naira to appreciate in the current month and the next three months, with significant projected growth within the next 6 months,” the survey stated.
The apex bank revealed that the optimism was underpinned by expectations of exchange rate improvements, business activity and increasing total orders as the economy resumed activities for the year.
The naira which began the year at N1,535/$1, closed at N1,474.78/$1, amid the introduction of new reforms and the waiver of the non-refundable annual license renewal fee for 2025 by the apex bank.
Similarly, the parallel market rate appreciated 1.1% to N1,617.00/$1.00 (as of 30/01/2025). Last week, the naira strengthened significantly, appreciating by 3.8% week-on-week (w/w) to N1,474.78/$1 at the official market.
According to Cordros Research, a research and investment based firm, the appreciation was driven by inflows from Foreign Portfolio Investors (FPIs), substantial contributions from International Oil Companies (IOCs), and the CBN’s $18.40 million intervention to authorised dealers.
However, the country’s FX reserves declined for the fourth consecutive week by $218.05 million w/w to $39.77 billion (29 January). Thus, at the end of January 2025, FX reserves dropped by $1.11 billion or 2.7% month-on-month (m/m) from $40.88 billion recorded in December 2024.
In the forwards market, the naira rates increased across the 1-month (+3.8% to N1,533.09/$1), 3-month (+3.9% to N1,605.02/$1), and 6-month (+4.3% to N1,705.97/$1), and 1-year (+2.6% to N1,912.21/$1) contracts.
Reacting to the performance of the naira, economic analysts noted that sustained reforms from the CBN have helped stabilize the currency since December 2024.
“Increased foreign exchange earnings, bolstered by higher crude oil sales and improvements in manufacturing and agricultural sectors. Also, reduced importation of petroleum products due to increased domestic refining capacity, eased pressure on foreign exchange demand”, they said.
The Nigerian Economic Summit Group (NESG) had projected that the Naira could stabilize at an average exchange rate of N1,300/$1 in 2025, contingent on Nigeria following an optimal stabilization strategy.
While the current rate hasn’t reached that level yet, the trend shows significant progress towards that projection.
“The renewed interest of Foreign Portfolio Investors (FPIs) in the FX market—driven by improved market confidence, a more efficient FX framework, and strengthening macroeconomic conditions—alongside the CBN’s sustained market interventions, is expected to support naira stability in the short term”, analysts at Cordros Research said.
For their part, analysts at Afrinvest Research, said, “In the new month, we expect the naira to remain on a positive trajectory bolstered by CBN’s effort at currency stability”.