The naira closed February 2025 with an 8.5% month-on-month gain on the parallel market, settling at N1,490/$.
However, on the official market, it declined by 1.7% month-on-month, closing at N1,500/$, according to the Afrinvest Monthly Market Report.
During the same period, Nigeria’s foreign reserves fell by 3.2% month-on-month, standing at $38.46 billion as of Thursday.
Analysts at Afrinvest linked this drop to the Central Bank of Nigeria’s efforts to stabilize the naira, particularly through the resumption of payments for the verified portion of the outstanding $7 billion foreign exchange backlog.
Looking ahead, the report projected that, “In March, we anticipate the naira will maintain its positive performance across FX segments, supported by the CBN’s continued USD supply to BDCs and DMBs, provided there are no adverse market shocks.”
Recently, the naira has hovered around the N1,500/$ range in both market segments, reflecting mild strength against the US dollar.
However, lower oil prices have impacted forex inflows, with Nigeria’s Bonny Light crude losing $2.36 (3.2%) week-on-week, closing at $75.88 per barrel last Thursday.
Cowry Asset Research explained the reason behind this decline, “This decline was primarily driven by weakened global demand, which weighed on crude prices across the board. The sustained pressure on oil prices resulted in lower dollar inflows into Nigeria’s economy, directly impacting the nation’s foreign exchange reserves. As a result, forex reserves declined by $240m, or 0.61 per cent week-on-week, reflecting weaker oil earnings and highlighting the persistent foreign exchange liquidity challenges facing the country.”
Meanwhile, the naira appreciated marginally at the official market, strengthening by 93 kobo to close at N1,500.15/$. At the parallel market, it gained N5, settling at N1,490/$, as demand pressures eased slightly.
Looking ahead, analysts foresee continued efforts by the CBN to stabilize the naira. According to experts, “In the coming week, we anticipate a continued battle for stability in the forex market as the apex bank intensifies efforts to defend the naira. With the CBN expected to take more decisive steps to support the local currency, including tightening liquidity and enhancing forex supply mechanisms, the naira could gain further ground against the dollar in the coming week.”
Despite these efforts, financial experts caution that factors such as rising debt, declining reserves, and high inflation could undermine forex reforms, making long-term stability uncertain.
