The Nigerian naira continued to decline against the US dollar on Monday, April 28, 2025, closing at ₦ 1,596 to $1 in the official foreign exchange market.Â
This marks a ₦7 decline from the previous rate of ₦ 1,596/$1 on Friday, April 25, 2025, continuing the downward trend that has defined Nigeria’s foreign exchange landscape in recent weeks.
According to official figures from the Central Bank of Nigeria (CBN), the naira reached a session high of ₦1,603.50 per $1 and a low of ₦1,596 per $1. The average exchange rate for the day settled at ₦ 1,601.38 per $1, highlighting ongoing volatility and uncertainty within the official market framework.
In the parallel market, the naira also experienced a slight depreciation, trading at ₦1,605 per $1 on Monday, compared to ₦1,600 per $1 on Friday. Although this was a slight recovery from the ₦1,610/$1 recorded last Thursday, the gap between the official and black-market rates remains concerning. The current spread of ₦9 highlights structural inefficiencies in the foreign exchange market and persistent speculative activities.
Naira’s Broader Weakness Across Global Currencies
The naira’s weakness wasn’t limited to the US dollar. On Monday, it also depreciated significantly against other major currencies:
- ₦2,185.96/£1 (British Pound Sterling)
- ₦1,818.24/€1 (Euro)
- ₦1,931.69/CHF1 (Swiss Franc)
These figures indicate that Nigeria’s currency woes are far-reaching and driven by factors beyond local market dynamics. External trade imbalances, capital flight, and inflationary pressures continue to erode the naira’s strength across multiple fronts.
What’s Driving the Decline?
A combination of high demand for foreign currency and limited supply fuels the persistent depreciation of the naira. Importers, manufacturers, and international travelers remain the key players, exerting intense pressure on the market. Despite various interventions by the CBN, including direct funding of banks and Bureau De Change (BDC) operators, demand continues to outstrip supply.
Financial analysts suggest that the naira’s struggles are rooted in structural economic challenges. These include limited forex inflows from oil exports, underwhelming foreign investment, and the delayed impact of government reforms. Investor confidence also remains shaky due to inconsistent monetary policies and uncertainty around fiscal discipline.
CBN’s Strategy and Limitations
To address the crisis, the Central Bank has undertaken several measures, including the unification of multiple exchange rates and the clearing of foreign exchange backlogs. The regulator is also focused on boosting market liquidity, increasing diaspora remittances, and promoting transparency through reforms.
However, market participants argue that these moves, while commendable, are not enough on their own. According to some BDC operators, there is an urgent need for stronger collaboration between fiscal and monetary authorities to build a more stable macroeconomic environment. More inclusive and realistic policies are necessary to address inflation, unemployment, and insecurity, all of which impact investor confidence and exchange rate stability.
Market Outlook and Investor Sentiment
Many investors and exporters have adopted a wait-and-see approach, opting to remain cautious due to ongoing macroeconomic uncertainties. Trading volumes remain moderate, reflecting a lack of conviction that current policy efforts will yield long-term stability without deeper structural adjustments.
Despite these challenges, there’s a glimmer of hope. Global credit ratings agency Fitch recently upgraded Nigeria’s credit rating to ‘B’, citing improved policy credibility and a reduction in immediate economic risks. This could potentially encourage foreign investment if backed by consistent and investor-friendly reforms.
Nigeria’s forex challenges are far from over, but recent moves by the CBN show a willingness to confront the crisis head-on. However, until supply-demand imbalances are resolved and investor trust is restored, the naira’s path to recovery will remain uncertain.
For businesses and individuals navigating this turbulent terrain, staying informed and adjusting financial strategies accordingly is critical to mitigating currency risk in the months ahead.
