The exchange rate between the naira and the US dollar showed signs of stability mid-week, trading at N1,605/$1 in the parallel market on Wednesday, February 5, 2025.
This comes after a brief fluctuation in the foreign exchange (FX) market earlier in the week.
According to data obtained by Nairametrics, the naira traded at N1,605/$1 (selling) and N1,602/$1 (buying) on Monday, February 3, 2025.
However, on Tuesday, February 4, 2025, the local currency depreciated slightly to N1,610/$1 before appreciating again to N1,605/$1 by Wednesday.
This week’s performance indicates an improvement compared to the previous week, where the naira traded at weaker levels.
Between Monday and Wednesday last week, the exchange rate stood at N1,660/$1 (Monday), N1,650/$1 (Tuesday), and N1,635/$1 (Wednesday) in the parallel market, suggesting that the currency has gained some strength over the past few days.
Performance in the Official Market
In the official market, the naira maintained stability, closing at N1,499/$1 on both Monday and Tuesday, according to data from the Central Bank of Nigeria (CBN).
This reflects steadiness in the regulated FX market, with no significant fluctuations observed.
For comparison, in the official market last week, the naira traded at N1,533.50/$1 on Monday, N1,520/$1 on Tuesday, and N1,506/$1 on Wednesday.
Naira’s Performance Against Other Currencies
Beyond the US dollar, the naira also experienced fluctuations against other major currencies such as the British pound (GBP) and the euro (EUR). Below is the exchange rate movement from Monday to Wednesday:
Market Outlook
Analysts suggest that the relative stability in the FX market could be attributed to improved dollar supply, CBN’s intervention strategies, and reduced speculation in the parallel market.
- Some analysts have said the exchange rate stability could be a result of CBN extending the deadline for Bureau de Change (BDC) operators to access the Nigerian Foreign Exchange Market (NFEM) for weekly FX purchases.
- In a circular signed by Dr. W.J. Kanya, the Acting Director of the Trade & Exchange Department at the CBN on Monday, the apex bank announced that the previous deadline of January 31, 2025, has now been extended to May 30, 2025.
- The Association of Bureau de Change Operators of Nigeria (ABCON) in their reaction to the news of the extension said the move demonstrates the CBN’s commitment to stabilizing the FX market.
- According to ABCON President, Dr. Aminu Gwadabe, it also promotes inclusiveness through the Electronic Foreign Exchange Matching System (EFEMS).
However, market watchers continue to monitor external factors such as crude oil prices, foreign reserves, and policy directives from the apex bank, which could influence future exchange rate movements.
As the week progresses, stakeholders will be keen to see if the naira maintains its current trajectory or faces renewed pressure in the FX market. For now, mid-week stability offers some relief to businesses and individuals engaged in forex transactions.
