The naira strengthened against the dollar on Friday across various foreign exchange (FX) markets, buoyed by improved liquidity, a development that echoes the World Bank’s recent affirmation of the local currency’s growing stability.
At the Nigerian Foreign Exchange Market (NFEM), the naira closed the week steady at N1,599.54 on Friday, marking the end of the four trading days, according to data from the Central Bank of Nigeria (CBN).
This figure reflected a slight improvement when compared to the previous week’s closing rate of N1,599.79. In the parallel market, often referred to as the black market, the naira also remained steady, closing at N1,605 on Friday, a rate it had consistently maintained since Wednesday.
In its latest assessment, the World Bank Group acknowledged the strengthening position of the naira, attributing the improvement to a series of government policies, enhanced foreign exchange liquidity, and reduced volatility in the market. “Policy efforts are aimed toward a unified and market-determined exchange rate to make the naira more competitive,” the World Bank stated, adding that, “improved foreign exchange liquidity and reduced volatility have led to a more stable naira so far this year.”
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The report further explained that as financial conditions became less restrictive and the benefits of foreign exchange market reforms began to materialise, several African currencies started to regain ground. “For instance, the Kenyan shilling appreciated 20 percent throughout 2024 and has remained relatively stable in 2025,” the report highlighted. It also noted that while currencies like the South African rand, along with others pegged to it, have seen minor fluctuations around 2023 levels, many African countries that faced foreign exchange shortages due to mounting external debt and subdued export revenues saw sharp currency depreciations, particularly in 2024.
Among the weakest performing currencies over the past year were the South Sudanese pound, the Ethiopian birr, and the Nigerian naira, all of which recorded value reductions exceeding 40 percent in 2024. Despite this, the report noted that, “compared to the preceding two years, the naira has been relatively stable in 2025.”
Data from Afrinvest Securities Limited further corroborated the World Bank’s position. According to a recent report, the naira had shed just 4.0 percent against the U.S. dollar as of April 23, 2025, trading at N1,602.30 per dollar. This relative stability, Afrinvest noted, was largely underpinned by the CBN’s frequent interventions aimed at bridging the liquidity shortfall in the FX market.
However, sustaining this momentum poses a challenge. Analysts warn that the CBN’s capacity to maintain its intervention is constrained by dwindling resources. “The firepower to sustain interventions is missing some of the critical strength,” Afrinvest observed, pointing to weak inflows from two of Nigeria’s major FX accretion sources, crude oil sales and portfolio investment flows. Notably, portfolio investment flows were down by 51.9 percent quarter-on-quarter in Q3 2024, falling to $1.3 billion.
This strain has also taken a visible toll on Nigeria’s foreign exchange reserves. From a starting figure of $40.9 billion at the beginning of 2025, reserves have slipped to $37.2 billion, the result of a mismatch between drawdowns and inflows. This mounting pressure on FX reserves, analysts warn, could deter risk-averse foreign investors and undermine broader economic growth prospects. It may also have contributed to the International Monetary Fund’s (IMF) recent decision to downgrade Nigeria’s growth projections.
In spite of these challenges, the naira’s performance so far in 2025 suggests a more stable and predictable FX environment compared to the turmoil of previous years.
