The Nigerian naira showed modest improvement in the official foreign exchange market on Friday, closing at ₦1,599.01 to the U.S. dollar, according to data from the Central Bank of Nigeria (CBN). This represents a slight appreciation from Thursday’s rate of ₦1,599.99/$1, offering a hint of stability in an otherwise volatile trading week.
Intra-day fluctuations on Friday saw the naira trading between ₦1,597.00 and ₦1,603.50 per dollar, reflecting both market pressures and gradual resilience as the currency continues to respond to ongoing CBN reforms.
Parallel Market Shows Weakness
While the official rate showed strength, the parallel market—often seen as a barometer of public sentiment—recorded a slight depreciation. Traders at Wuse Zone 4 in Abuja reported the naira closed at ₦1,632/$1, a modest decline from Thursday’s ₦1,625/$1. Earlier in the week, rates fluctuated between ₦1,633 and ₦1,635 before dropping slightly midweek.
This divergence between official and parallel market rates has widened the exchange rate gap, raising fresh concerns over forex market efficiency and arbitrage opportunities.
Last Week in Review
Across the week, the official market maintained relative stability:
- Monday: ₦1,597.70/$1
- Tuesday: ₦1,599.75/$1
- Wednesday: ₦1,596.01/$1
- Thursday: ₦1,599.99/$1
- Friday: ₦1,599.01/$1
Analysts suggest the parallel market’s fluctuations are being driven by temporary surges in dollar demand, particularly from importers, and by sentiment-based movements.
Inflation Eases Marginally
In a welcome development, headline inflation dipped to 23.71% in April 2025, from 24.23% in March, according to the National Bureau of Statistics. Although modest, this decline suggests early signs of easing cost-of-living pressures amid broader economic challenges.
External Reserves Rebound
Investor sentiment received an additional boost with news that Nigeria’s external reserves rose by $364 million between April 30 and May 14, moving from $37.93 billion to $38.30 billion. This 0.96% increase marks the first sustained gain of 2025 and is credited to improved market transparency and liberalization efforts by the CBN.
MPC Meeting in Focus
Attention now turns to the Monetary Policy Committee (MPC) meeting scheduled for May 19–20, where key decisions on interest rates and monetary policy direction will be made. The committee last held the Monetary Policy Rate (MPR) at 27.50% in February.
Economists believe the naira’s near-term trajectory will depend heavily on the outcomes of the MPC meeting, as well as sustained forex inflows, investor confidence, and macroeconomic stability.
