Naira Breaks 13-Year Record, Appreciates 6.5% in 2025 Amid CBN Intervention, Reserves Growth
- The naira appreciated by 6.5% to end 2025 on a strong note, marking its first annual gain since 2012
- CBN reforms and improved FX liquidity played key roles in the currency's turnaround
- Structural vulnerabilities persist, keeping economists cautiously optimistic despite the naira's recovery
The naira closed 2025 on a historic note, recording its first full-year appreciation in more than a decade as foreign exchange reforms by the Central Bank of Nigeria (CBN) began to reshape market confidence.
Data from the apex bank show that the currency strengthened by 6.5 per cent year-on-year, ending December 31 at ₦1,435 to the dollar, compared with ₦1,535 at the close of 2024.
Source: Getty Images
A volatile year with a strong finish
This marks the naira’s first annual gain since 2012, when it edged higher to ₦157.29 from ₦158.99 the previous year.
From 2013 through 2024, the currency weakened consistently, making the 2025 rebound a major psychological and policy milestone for Africa’s largest economy.
The appreciation capped a turbulent year for the naira. In the first half of 2025, the currency came under intense pressure from elevated inflation, strong demand for dollars and delays in foreign exchange inflows.
These factors pushed the naira to its weakest level in April, when it closed at around ₦1,602 to the dollar.
Momentum shifted from May, as the currency began a steady recovery. It closed near ₦1,585 in May and strengthened further to about ₦1,532 in June.
By September, the naira had broken below the ₦1,500 mark for most of the month, ending around ₦1,478.
The rally extended into October, when the naira touched approximately ₦1,427.5, before easing slightly in November to around ₦1,446.9.
Renewed demand and improved liquidity helped it regain ground in December, finishing the year close to ₦1,435.
CBN reforms drive turnaround
Analysts largely attribute the reversal to tighter monetary policy, improved FX inflows and a sharp decline in speculative activity following reforms introduced by the CBN in 2024.
These measures included the unification of exchange-rate windows, enhanced transparency and stronger price discovery mechanisms.
As a result, the gap between the official and parallel market rates narrowed significantly, falling below 5 per cent for much of the second half of the year.
According to a report by Daily Sun, this reduction curtailed arbitrage opportunities that had previously encouraged speculation and distorted FX pricing.
“The improved price discovery mechanism and increased transparency in the FX market helped support the naira in the second half of the year,” said Ade Omotosho, an analyst at Kwik Securities.
Narrower FX spread boosts confidence
With fewer incentives for round-tripping dollars between markets, supply-and-demand fundamentals played a greater role in price formation.
This shift gave the central bank more effective control over liquidity conditions and helped restore a measure of confidence among investors and businesses.
Foreign reserves growth also supported the currency, providing the CBN with greater firepower to smooth volatility and meet legitimate FX demand.
Cautious optimism despite risks
Despite the positive headline performance, economists caution that structural vulnerabilities remain.
Inflation is still elevated, and Nigeria’s reliance on oil exports leaves the naira exposed to swings in global crude prices.
FX liquidity, though improved, remains sensitive to foreign portfolio flows and energy production disruptions.
Source: Getty Images
Even so, the naira’s 2025 performance represents a clear break from more than a decade of persistent depreciation.
After years of eroding confidence, the latest data suggest that the CBN’s reform agenda is beginning to deliver tangible results, signaling a cautiously optimistic outlook for the currency.
Africa’s weakest currencies in 2025
Legit.ng earlier reported that weak currencies deter investments as volatility turns foreign and local business planning nearly impossible across Africa A weak currency in Africa is rarely just a market statistic.
It often shows up in everyday life through higher food prices, rising transport costs, shrinking incomes and deeper poverty.
In 2025, this reality became starker as several African currencies recorded sharp declines, sending shockwaves far beyond foreign-exchange trading floors,
Proofreading by James Ojo, copy editor at Legit.ng.
Source: Legit.ng
