The naira closed February 2025 with an 8.5 per cent month-on-month gain in the parallel market, settling at 1,490 per dollar. However, it recorded a 1.7 per cent decline in the official market, closing at 1,500 per dollar.
According to the Afrinvest Monthly Market Report, the nation’s foreign reserves dropped by 3.2 per cent over the month, standing at $38.46 billion as of Thursday. Analysts attributed this decline to the Central Bank of Nigeria’s efforts to stabilize the currency, particularly through the resumption of payments for verified portions of the outstanding $7 billion foreign exchange backlog.
Looking ahead to March, analysts anticipate that the naira will maintain its upward trend across foreign exchange segments, provided there are no unexpected market shocks. This outlook is supported by the CBN’s ongoing USD supply to Bureau De Change operators and Deposit Money Banks.
The foreign exchange market saw the naira show mild strength against the U.S. dollar, fluctuating around the 1,500 mark in both the official and parallel markets.
Cowry Asset Research pointed to global oil market dynamics as a key factor influencing the exchange rate. Over the past week, Nigeria’s oil benchmark, Bonny Light crude, declined by $2.36, or 3.2 per cent, closing at $75.88 per barrel due to weakened global demand. This drop in crude prices led to lower dollar inflows into Nigeria’s economy, impacting the foreign exchange reserves, which fell by $240 million, or 0.61 per cent week-on-week.
At the official forex window, the naira appreciated slightly by 93 kobo against the dollar, closing at 1,500.15 per dollar, while in the parallel market, it gained 5 naira to settle at an average of 1,490 per dollar as demand pressure eased.
Analysts predict that in the coming week, the forex market will continue to battle for stability, with the CBN expected to implement more measures to support the local currency. These efforts may include tightening liquidity and enhancing forex supply mechanisms, potentially strengthening the naira further against the dollar.
Despite ongoing forex reforms, experts caution that challenges such as rising debt levels, declining foreign reserves, and high inflation rates could pose threats to the naira’s long-term stability.
