The Nigerian naira has shown consistent strength against the US dollar throughout the week, culminating in a notable appreciation on Friday, May 23, 2025.
Data from the Central Bank of Nigeria (CBN) indicate that the naira closed at ₦1,580.44 per dollar in the official foreign exchange market on Friday, marking a ₦4.51 gain from the previous day’s closing rate of ₦1,584.95.
This represents a 0.28% daily appreciation.
Throughout the week, the naira demonstrated steady gains.
On Monday, May 19, it traded at ₦1,598.68; on Tuesday, it was ₦1,590.45; and on Wednesday, it stood at ₦1,584.49.
These incremental improvements suggest a trend of strengthening investor confidence and enhanced forex liquidity.
The Central Bank of Nigeria has been proactive in implementing measures to stabilize the forex market.
In its 300th Monetary Policy Committee (MPC) meeting held on May 19 and 20, 2025, the CBN decided to maintain the Monetary Policy Rate at 27.5%.
Governor Olayemi Cardoso emphasized that this decision was influenced by positive macroeconomic developments, including a gradual decline in inflation and improved market confidence.
The MPC also noted the convergence of exchange rates between the official market and the Bureau de Change segment, attributing this to the introduction of the Electronic Foreign Exchange Matching System (B-Match) and the Nigeria Foreign Exchange Code, which have enhanced market transparency and reduced speculative activities.
Economists have observed that the naira’s appreciation is supported by several factors.
Increased oil production, which reached 1.54 million barrels per day in January 2025, has bolstered Nigeria’s external reserves, providing a cushion against external shocks.
Additionally, the CBN’s efforts to attract foreign investments and diaspora remittances have injected much-needed liquidity into the economy.
The relaxation of restrictions on certain import items has also contributed to a more balanced demand for foreign exchange.
Despite these positive developments, challenges remain.
Inflation, though gradually declining, continues to exert pressure on the economy.
The recent rebasing of the Consumer Price Index by the National Bureau of Statistics showed a decrease in the inflation rate to 24.48% in January 2025, compared to 34.80% in December 2024.
However, the MPC has expressed confidence that ongoing food security measures and improved supply chains will alleviate inflationary pressures over time.
Looking ahead, the sustainability of the naira’s appreciation will depend on the CBN’s ability to maintain forex market stability, manage inflation, and foster economic growth.
The continued collaboration between monetary and fiscal authorities will be crucial in achieving these objectives.
In summary, the naira’s performance this week reflects a combination of strategic policy interventions and positive economic indicators.
While challenges persist, the current trajectory suggests a cautiously optimistic outlook for Nigeria’s currency in the near term.
