The naira faced intensified pressure across foreign exchange markets this week, closing at N1,544.50/$1 on the official market and reaching as high as N1,647/$1 in the parallel market.
On Friday, January 10, 2025, the Central Bank of Nigeria (CBN) reported a closing rate of N1,544.50/$1, a slight decline from Thursday’s rate of N1,542.00/$1. In the parallel market, the naira traded within the range of N1,645.00/$1 to N1,647.00/$1, highlighting the persistent challenges in accessing dollars for businesses and individuals.
Weekly Trends in the Official Market
The naira began the week on a relatively stronger note, opening at N1,530.00/$1 on Monday, January 6, 2025. However, it steadily depreciated, hitting its weakest point of N1,548.00/$1 midweek before closing slightly stronger at N1,544.50/$1 by Friday.
CBN data showed an intraday average of N1,543/$1 between Thursday and Friday, a decline from the N1,533.75/$1 recorded at the start of the week. In the Nigerian Foreign Exchange Market (NFEM), the naira’s rate on Friday stood at N1,542.0256/$1, down from Monday’s opening rate of N1,533.6065/$1.
Parallel Market Volatility
In the parallel market, the naira’s performance was notably volatile, fluctuating sharply due to increased demand for dollars by importers and speculative traders. By the end of the week, it settled at N1,647/$1, reflecting a significant disparity with the official market.
Market analysts attributed this volatility to lingering uncertainties surrounding Nigeria’s foreign exchange policies and a persistent dollar shortage, further widening the gap between the official and parallel markets.
Policy Measures Yet to Stabilize the Naira
The CBN’s interventions, including the removal of rate caps in the Investor and Exporters (I&E) Window in June 2023 and promises of exchange rate unification by President Bola Tinubu, have yet to yield desired results. Regular dollar auctions and spending restrictions on foreign currency have also fallen short of stabilizing the naira.
As pressures on Nigeria’s foreign exchange reserves persist, analysts suggest that achieving balance in supply and demand remains critical to mitigating the naira’s depreciation and restoring confidence in the foreign exchange market.
