The Nigerian naira continued its downward trend on Wednesday, May 7, 2025, closing at N1,612 to the U.S. dollar in the official Nigerian Foreign Exchange Market (NFEM), according to data from the Central Bank of Nigeria (CBN). This marks a slight decline from Tuesday’s rate of N1,609/$1, reflecting persistent pressure on the currency despite modest gains in external reserves.
During intraday trading, the naira fluctuated between a high of N1,615/$1 and a low of N1,605.01/$1, indicating increased volatility in the market. This compares to the previous day’s narrower band of N1,609.5 to N1,603/$1.
Traders attributed the fluctuations to ongoing liquidity constraints and delayed forex inflows, even as the CBN maintained its commitment to supporting the market through interventions.
In the parallel market, the naira weakened further, exchanging at N1,625/$1—slightly down from N1,615/$1 on Tuesday and N1,605/$1 on Monday. The narrowing difference between official and black market rates, now around N13, has raised fresh alarms over speculative activity and limited access to foreign exchange via formal channels.
Experts Sound Alarm Over Supply Gaps
Adetokunbo Bamidele, a Lagos-based FX analyst, noted that despite improvements in transparency and market reforms, Nigeria’s forex supply remains inadequate. “There’s some progress in terms of price discovery, but the lack of steady inflows from oil exports, remittances, or foreign direct investments continues to weigh on the naira,” he said.
Echoing this view, Dr. Kemi Taiwo of Axion Financial Services stressed the importance of coordinated policy efforts to stabilize the currency. “We need a well-balanced strategy that not only manages demand but also boosts supply through structural reforms. Without that, the reliance on the black market will persist,” she warned.
Reserves Edge Up, But Caution Persists
Nigeria’s foreign reserves saw a modest rise to $38.10 billion as of May 6, up from $37.93 billion at the end of April. The uptick was linked to recent oil receipts and possible external borrowings. However, analysts caution that the reserves may not be sufficient to shield the naira if speculative pressures escalate.
With forex supply concerns remaining front and center, all eyes are now on the CBN and federal authorities for further policy signals that could restore market stability and investor confidence.
