Despite pressure, volatility and uncertainty, The Naira has shown resilience as it navigates sporadic local and international economic environments in 2025. Robust Monetary Policy and lower inflation rate are two factors within immediate reach that would contribute to a sustained stability & appreciation of the naira in the coming months.
The performance of the Nigerian naira in the foreign exchange market from January 2025 to date has been defined by significant volatility, periodic recoveries, and shifting investor sentiment shaped by monetary policy decisions.
As Nigeria continues transitioning through economic reforms, the foreign exchange market has become one of the clearest mirrors of the country’s broader macroeconomic conditions. Understanding the trends over this period provides insight into the factors driving currency stability, the pressures influencing depreciation, and the outlook for the months ahead.
January – Early Pressures and Market Adjustment.
The year opened with the naira trading around the mid-₦1400s per dollar at the official window. Market activity during this period reflected residual pressures from late 2024, including elevated demand for foreign exchange, seasonal import payments, and tightened liquidity conditions.
January’s performance also reflected cautious investor sentiment as market participants waited for policy signals from the monetary authorities. Despite the pressures, the naira maintained some stability due to moderate intervention and improved FX inflows from remittances during the holiday season.
February – Widening Demand and Continued Volatility.
By February, the naira had weakened further into the ₦1500+ range. Increased demand from manufacturers, import-dependent sectors, and investors adjusting portfolios added pressure on the currency. The market also reacted to expectations surrounding future monetary tightening.While the currency experienced depreciation, liquidity in the official window improved slightly, as more participants transitioned from parallel-market transactions to regulated platforms, responding to increased oversight and the push for greater market transparency.
March – Peak Volatility and Steeper Depreciation.
March witnessed the steepest depreciation in the period under review. The naira briefly tested levels above ₦1580 per dollar in the official window. This depreciation was driven by intensified demand for foreign exchange, slower-than-expected inflows from exports, and speculative positioning by some market operators.
Market uncertainty peaked during this period, and confidence remained fragile. Nevertheless, the depth of the official FX market improved as reforms continued, setting the stage for subsequent corrections.
April – Beginning of Currency Recovery.
April marked a turning point. The naira strengthened significantly, appreciating to around the ₦1500 range after weeks of instability.
Several factors contributed to this rebound: Tighter liquidity management in the banking system, Stricter supervision of FX allocations and compliance, A decline in speculative hoarding of dollars, Improved foreign-exchange inflows from oil and non-oil sources.
The recovery during this month provided much-needed relief to importers and consumers and signaled the early impact of ongoing monetary interventions.
May and June – Sustained Strengthening and Market Confidence.
From May into June, the naira experienced a sustained phase of strengthening, falling further toward the ₦1400 region. This was one of the most encouraging periods for the currency in 2025.
The improvement was supported by: Higher foreign-exchange turnover, Growing investor confidence in monetary policy, Better alignment between official and parallel market rates, Increased transparency in FX distribution mechanisms.
June recorded one of the strongest levels of the year, showing the impact of consistent tightening and disciplined liquidity management.
July – Mild Correction.
July brought a mild correction as the naira weakened slightly into the ₦1420+ band. Demand pressures re-emerged, especially from manufacturers restocking inputs and sectors tied to global commodity cycles.
However, the correction did not reverse the gains made earlier, as markets remained relatively stable.
August – Temporary Pressure and Rebound.
In August, the currency faced temporary pressure, moving toward the ₦1480 range. This was largely driven by: Increased demand from corporates, A rise in offshore portfolio rebalancing, Moderate shortfalls in dollar supply.
Despite this, the market avoided the sharp swings experienced earlier in the year, reflecting improved resilience.
September and October – Renewed Stability.
Toward September and October, the naira regained lost ground, slipping back toward the mid-₦1400s and eventually strengthening toward the ₦1415 level.
Market analysts attributed this stability to: Tighter monetary policy, Reduced speculative demand, Improved clarity in FX market reforms, Stronger inflows from the energy sector.
Overall, the naira’s performance from January to date shows a pattern of early weakness, mid-year recovery, temporary corrections, and eventual stabilisation. The currency remains sensitive to policy direction, supply dynamics, and global market sentiment, but the improvements recorded point to increasing maturity within Nigeria’s FX management framework.
The naira’s journey through 2025 so far has been defined by fluctuating pressures and gradual strengthening supported by monetary tightening and reforms. While challenges remain—especially inflation, import dependency, and global uncertainty—the currency’s performance signals improved market discipline and a cautiously optimistic trajectory.
If current policies are sustained, and structural reforms deepen, the naira may continue on a path of greater stability in the months ahead.
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