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FX: Naira Struggles Against Dollar Despite Lower Inflation Figures

Published

1 month ago

Mar 18, 2025.

Mixed Reactions in Parallel Market: While one BDC operator reported a fall to ₦1,577 per dollar, another noted a slight improvement to ₦1,585 per dollar.
Inflation Declines Slightly: Nigeria’s inflation rate dropped to 23.18% in February 2025 from 24.48% in January 2025, but the Naira’s depreciation continues to raise concerns.
The Nigerian Naira continued to lose value against the US dollar across various foreign exchange markets, despite a recent decline in the country’s inflation rate.

Naira Weakens Further: The Naira fell to ₦1,528.03 per dollar from ₦1,517.93 last week, losing ₦10.1 in value despite a drop in inflation.

As the week began, data from the Central Bank of Nigeria (CBN) showed that the Naira weakened to ₦1,528.03 per dollar, compared to ₦1,517.93 recorded last Friday.

This indicates a depreciation of ₦10.1 per dollar within a few days, raising concerns about the currency’s stability.

In the parallel market, commonly known as the black market, the Naira also experienced fluctuations. Abubakar Alhasan, a Bureau De Change (BDC) operator in Wuse Zone 4, Abuja, confirmed that the Naira fell to ₦1,577 per dollar from the ₦1,570 rate it traded at the previous week. However, another BDC operator reported a slight improvement, stating that the Naira strengthened to ₦1,585 per dollar from ₦1,590.

These varying rates highlight the ongoing volatility and uncertainty surrounding the Nigerian currency.

The depreciation of the Naira comes despite a slight decrease in Nigeria’s inflation rate. According to recent figures, the nation’s inflation dropped to 23.18 percent in February 2025, compared to 24.48 percent in January 2025.

This decline suggests a reduction in the overall increase in the prices of goods and services. However, the weakening Naira could pose further challenges by increasing the cost of imports and reducing purchasing power.

The persistent fall of the Naira reflects broader economic concerns and raises questions about the effectiveness of ongoing monetary policies aimed at stabilizing the currency.

Despite efforts by the Central Bank of Nigeria to manage foreign exchange supply and implement measures to strengthen the Naira, the currency continues to face downward pressure.

Market analysts suggest that the gap between the official and parallel market rates reflects underlying issues such as reduced foreign reserves, limited dollar supply, and increasing demand for foreign currency.

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As Nigeria navigates these economic challenges, many are closely watching how the government and the CBN will respond to stabilize the Naira and address the broader economic concerns affecting businesses and everyday citizens.

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