Naira records marginal gains against dollar amidst market volatility

The Nigerian currency, the naira, made a slight recovery against the US dollar at the official foreign exchange (FX) window on Wednesday, March 19, 2025, reflecting ongoing fluctuations in the country’s forex market.

According to data from the Central Bank of Nigeria (CBN), the naira appreciated to N1,530.52/$1 at the official window, marking a modest gain from the N1,532.93/$1 recorded on Tuesday.

This represents an improvement of N2.41 on a day-to-day basis.

However, the story was different in the parallel market, where the naira weakened to N1,585/$1, losing N5 from the previous day’s rate of N1,580/$1.

Meanwhile, the local currency remained stable against the British Pound at N2,040/£1, and against the Canadian Dollar at N1,200/CA$1. Conversely, it lost N10 against the Euro, trading at ₦1,710/€1 compared to the previous day’s rate of ₦1,700/€1.

Financial analysts suggest that the naira’s marginal appreciation at the official window is likely due to increased forex inflows, possibly from foreign investors responding to recent CBN interventions aimed at stabilizing the market.

The apex bank has been implementing a series of policy measures, including forex reforms, to curb speculation and improve liquidity.

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Dr. Olumide Adebayo, a financial economist at the University of Lagos, noted that the central bank’s move to unify the exchange rate system and enhance transparency has had some positive effects.

“The CBN’s recent intervention in the forex market has provided a cushion for the naira. However, the fluctuation in the parallel market suggests that the demand for dollars remains high, possibly due to import dependency and speculative trading,” he said.

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On the depreciation of the naira in the black market, currency trader and market analyst, Yusuf Abdullahi, attributed it to increased dollar demand by businesses settling international transactions.

“The dollar shortage is still a major issue. Many businesses that cannot access forex at the official window turn to the black market, which drives up demand and puts pressure on the naira,” he explained.

Market experts caution that the naira’s recovery, though positive, remains fragile due to external economic pressures, including fluctuating oil prices and Nigeria’s reliance on imports.

Investment banker and forex specialist, Chika Umeh, warned that sustained stability would require more than short-term interventions.

“For a long-term solution, Nigeria must address structural issues like boosting local production, improving export competitiveness, and reducing dependency on imported goods,” she emphasized.

To maintain forex stability, the Nigerian government is expected to continue implementing fiscal and monetary policies aimed at attracting foreign investments and enhancing forex reserves.

Analysts also anticipate further interventions from the CBN, including strategic dollar supply to meet demand and curb volatility.

While the naira’s marginal gain at the official market is a step in the right direction, experts stress the need for holistic economic policies that address both supply and demand factors in the forex market.

As global economic conditions shift, the ability of Nigerian policymakers to implement effective and sustainable forex strategies will play a crucial role in determining the naira’s future trajectory.