• Victor Amos
• Africa , Economy , News
• March 3, 2025
• 383 views
• 2 minutes Read

Naira Holds Strong, Finishes February Under N1,500 Against the Dollar

In February 2025, the Nigerian naira demonstrated resilience, closing the month with an 8.5% month-on-month gain on the parallel market, settling at 1,490/$, while it ended at 1,500/$ on the official market, marking a 1.7% decline month-on-month. Despite these gains, the nation’s foreign reserves dipped by 3.2% month-on-month, standing at $38.46 billion as of Thursday. Analysts from Afrinvest attributed this decline to the Central Bank of Nigeria’s (CBN) efforts to stabilize the naira, particularly through payments toward the verified portion of the $7.0 billion foreign exchange backlog. Looking ahead, analysts project that the naira will maintain its positive trajectory in March, supported by the CBN’s continued supply of US dollars to Bureau de Change operators (BDCs) and Deposit Money Banks (DMBs), barring any adverse market shocks. In recent weeks, the naira has shown mild strength against the US dollar, hovering around the N1,500 mark across both market segments. However, challenges persist. Cowry Asset Research highlighted that Nigeria’s oil benchmark, Bonny Light crude, traded weakly in the international market, shedding $2.36 (3.2%) week-on-week to close at $75.88 per barrel as of Thursday. This decline was driven by weakened global demand, which weighed on crude prices and reduced dollar inflows into Nigeria’s economy. Consequently, the nation’s foreign exchange reserves fell by $240 million (0.61%) week-on-week, reflecting weaker oil earnings and ongoing foreign exchange liquidity challenges. At the official market, the naira appreciated marginally by 93 kobo against the dollar, closing at N1,500.15/$, while on the parallel market, it gained N5 to settle at an average of N1,490/$ as demand pressure eased slightly. Analysts anticipate a continued struggle for stability in the forex market in the coming week, with the CBN expected to intensify efforts to defend the naira. These measures may include tightening liquidity and enhancing forex supply mechanisms, potentially enabling the naira to gain further ground against the dollar. Despite these efforts, experts have warned of underlying challenges threatening the naira’s stability. These include Nigeria’s mounting debt burden, the sustained decline in foreign reserves, and high inflation rates. These factors, they argue, could undermine the potential gains of ongoing foreign exchange reforms, posing significant risks to the currency’s long-term stability. Click on the link to join the Metascholar News channel for curated, meaningful stories tailored just for YOU: https://t.me/metascholarworkshopsltd