CBN Policies Boost Naira Stability as Traders Announces New Exchange Rate

• The naira showed signs of stability early this week, trading at N1,610 per dollar in the parallel market, reflecting a slight gain from last week
• Despite a small weekly decline in the official market, Nigeria’s foreign reserves increased to $38.6 billion, indicating strengthening macroeconomic fundamentals
• The CBN remains optimistic about the currency’s near-term prospects, attributing improvements to focused policy measures aimed at restoring investor confidence

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

Based on data gathered from street currency traders and several online rate-tracking platforms, the naira continued to show signs of stability at the beginning of the week, trading at N1,610 per dollar in the parallel market, also known as the black market, on Monday.

This represents a slight gain of N5 over the rate of N1,615 per dollar quoted in the same market on Friday.

A street currency dealer in Lagos, Abubakar, explained the moderate appreciation and decreased volatility by pointing to a discernible drop in the demand for dollars, BusinessDay reported.

He said,

“The market has been calm lately. The rush to buy dollars is not as crazy as it was a few months ago. People are becoming more cautious, and I believe the CBN’s policies are beginning to have some effect.”

According to data released by the Central Bank of Nigeria (CBN), the naira saw a 0.3% increase in value on the Nigerian Foreign Exchange Market (NFEM), closing at N1,580.44 per dollar on Friday as opposed to N1,584.95 quoted on Thursday.

In a weekly market update, Afrinvest Securities Limited stated that as of May 22, 2025, Nigeria's foreign reserves stood at $38.6 billion, up 0.6 percent week over week.

With the help of the apex bank's calculated actions, the increase in reserves has been seen as an indication of strengthening macroeconomic fundamentals.

According to the study, the naira had a slight weekly decline of 1.1% in the official market, finishing at N1,580.44 per dollar, despite these encouraging developments. By the conclusion of the preceding week, the currency in the parallel market had declined by 0.8% within the same time frame, finishing at N1,610 per dollar.

However, Afrinvest analysts are cautiously positive about the currency's near-term prospects.

“Barring any significant short-term shocks, we expect the naira to maintain its current levels in the near term,” the firm stated in its weekly report.

However, the trajectory of the naira has been one of steady decline over time. In the last 21 years, the value of the currency has declined by almost 91.5%, from N134.50 per dollar in May 2009 to N1,580.44 per dollar as of Friday, May 23, 2025.

In light of these circumstances, the CBN keeps reaffirming its dedication to bolstering the financial system by emphasising external reserve management.

The apex bank's Net Foreign Exchange Reserve (NFER) increased significantly, reaching $23.11 billion by the end of 2024, according to recent data.

In comparison to prior years — $3.99 billion at the end of 2023, $8.19 billion in 2022, and $14.59 billion in 2021 — this reflects a significant improvement and the greatest level in over three years.

Additionally, the gross external reserves exhibited a positive trend, increasing from $33.22 billion at the start of 2024 to $40.19 billion by the end of 2024.

A more accurate indicator of the foreign exchange buffers available to pay urgent external obligations, according to the CBN, is the NFER, which adjusts gross reserves by accounting for near-term liabilities.

The CBN's governor, Olayemi Cardoso, commented on these improvements, stating that the reserve position improved as a result of intentional and well-coordinated policy measures.

“What we are seeing is the fruit of consistent, focused policies that are aimed at restoring investor confidence and ensuring financial system stability,” he said.

“We have made it clear that rebuilding confidence in our monetary system is a priority, and we are beginning to see the results.”

FG finally finds solution to exchange rate concern

Legit.ng reported that a strategic venture capital effort has been launched by Nigeria and Japan to provide Naira-denominated financing to high-growth firms.

This strategy seeks to offer long-term concessional finance while protecting companies against exchange rate concerns.

To complete the fund's framework, Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, met with representatives from the Japan International Cooperation Agency (JICA) and the Nigeria Sovereign Investment Authority (NSIA) in Abuja.

Source: Legit.ng