Naira strengthens to N1,597.70/$1 as CBN reforms narrow official-black market exchange rate gap

Nigeria’s currency, the naira, recorded a notable appreciation against the US dollar at the official foreign exchange window on Monday, May 12, 2025, closing at N1,597.70/$1, according to data published by the Central Bank of Nigeria (CBN).

This marks a 0.58% gain or N9.30 compared to last Friday’s closing rate of N1,607.00/$1.

Trading data from the Nigerian Foreign Exchange Market (NFEM) showed that the naira traded within an intraday band ranging from a low of N1,595.00/$1 to a high of N1,605.05/$1, with the average exchange rate settling at N1,600.30/$1.

The performance comes amid renewed efforts by the apex bank to stabilize the currency through a combination of policy tightening and liquidity-boosting reforms.

Against the British pound sterling, however, the naira came under pressure, exchanging at N2,113.36/£1, reflecting the strength of the pound across global currency markets.

In the parallel market, the naira also showed modest gains, appreciating to N1,623/$1 on Monday from N1,630/$1 recorded on Friday.

This reduced the gap between the official and unofficial exchange rates to N25.30, one of the narrowest margins observed in recent weeks—a trend analysts interpret as a sign of increasing market alignment.

Financial analysts attribute the naira’s recent appreciation to improved foreign exchange inflows, driven by increased remittances and enhanced supply from the CBN.

READ ALSO: Naira slips near 2025 lows as demand for Dollar surges

The central bank has also been clearing backlogs of unmet FX demand, which had previously strained the currency and created distortions across market segments.

“The narrowing spread between the official and parallel market rates suggests that speculative demand for dollars is declining, while confidence in the formal FX window is gradually returning,” said David Omale, a Lagos-based financial analyst.

Speaking during the launch of the World Bank’s Nigeria Development Update in Abuja on Monday, CBN Governor Olayemi Cardoso reiterated the bank’s commitment to orthodox monetary policy as a tool for restoring macroeconomic stability.

“If we continue with our course of orthodox monetary policy—which has already shown results—then inflation will moderate over time. Alongside that, interest rates will also begin to ease,” Cardoso stated.

He emphasized that the CBN remains focused on its core mandate of ensuring price stability and financial system soundness, adding that foreign exchange market volatility has significantly dropped to 0.5%, compared to 4% just a year ago.

The National Bureau of Statistics (NBS) is expected to release April’s inflation report in the coming days. Analysts forecast a potential slowdown in the rate of consumer price increases after a sharp uptick in March, driven by surging fuel and food prices.

At its 299th meeting in February, the Monetary Policy Committee (MPC), led by Cardoso, kept the Monetary Policy Rate (MPR) unchanged at 27.5%, a level it held since November 2024, reinforcing the apex bank’s commitment to monetary tightening aimed at curbing inflation and supporting naira stability.

The recent gains by the naira, both in the official and black markets, suggest that the CBN’s reforms—including improved transparency, FX backlog clearance, and increased investor engagement—are beginning to yield measurable results, restoring some level of stability to Nigeria’s volatile currency market.