Nigeria’s currency came under fresh pressure in July 2025 as the naira fell in the parallel market amid rising demand for foreign exchange and a strong rally in the U.S. dollar.
The exchange rate fell to N1,565 per dollar by the end of the week as volatility came back to the unofficial market, which sparked worries over speculation and liquidity shortfalls in the economy.
The official Nigerian Foreign Exchange Market (NFEM) data from the Central Bank of Nigeria (CBN) revealed that the naira ended July at N1,533.50 per dollar, slightly weaker than N1,529.71 in June.
Though the depreciation was little—just 0.25 percent—it showed a growing gulf between the official and blackmarket rates, which peaked at a N30 per dollar.
Earlier in July, the naira had shown hopeful strength rising to N1,518 per dollar on July 14. Reflecting brief bullish momentum fueled by increased foreign exchange inflows and policy support from the CBN, March’s best level was this. That midmonth optimism, though, was not kept as market forces turned back in support of the dollar.
Despite recent efforts at rate convergence and reforms by the apex bank, economic analysts including those at Renaissance Capital have forecast that the naira could lose up to 26 percent of its value this year. During the summer months, travel-related demand from affluent Nigerians put additional strain on forex availability, pushing parallel market demand.
Still, stronger monetary policies and continuous changes helped the naira mostly stay strong between January and July 2025. United Capital Research forecasts a somewhat bullish view, projecting the naira will finish the year trading between N1,490 and N1,520 per dollar should favorable investor attitude last and policy consistency is upheld.
July saw the U.S. dollar conclude with its highest performance yet in 2025. Encouraged by good economic data and less trade friction between the U.S. and China, the dollar index—which monitors the value of the greenback against a basket of prominent currencies—rose almost 3% during the last week of the month.
The Federal Reserve’s decision to keep interest rates was a primary factor in the dollar’s rise. This defied political pressure from President Trump to reduce borrowing expenses. Chair Jerome Powell underlined a datadriven strategy and indicated no near-term move toward rate cuts. This view, together with steady inflation statistics such as the Core Personal Consumption Expenditures (PCE) Index, helped to propel the dollar on a bullish surge.
From 63 percent earlier in the week to 43 percent after the Fed’s gathering, investor expectations for a September rate cut were drastically reduced. Reflecting the market’s evaluation of monetary policy direction, predictions for total rate reductions in 2025 also fell from 50 basis points to 35 basis points.
With the U.S. economy exhibiting resilience and inflation looking to be under control, the greenback seems set to rise past the symbolic 100-level on the dollar index. Should this vigor last, it may keep pushing emerging market currencies like the naira over the next few months.
July was marked by opposing trends in brief: the U.S. dollar climbed on international optimism and tight monetary policy while the naira fought seasonal and domestic headwinds. The second half of the year will most likely depend on how effectively Nigerian officials control capital flows, regain investor trust, and preserve macroeconomic stability.
