The Nigerian Naira has shown signs of stabilization and slight strengthening against the US dollar in the past week.
The Nigerian currency was trading at about N1,441.5/$ on the official Nigerian Foreign Exchange Market (NFEM), with parallel (black) market rates ranging from N1,435/$ – N/1,450/$.
This data represents a larger gain of 1.7 per cent over the previous month and a strong 13.5 percent increase year over year.
The local currency has strengthened by roughly 6.76 percent against the American currency in the first 11 months of 2025, partially reversing the sharp depreciation that occurred in 2023–2024.
The near-term trajectory of the Naira is described by analysts as stable to slightly bullish, with the possibility of additional appreciation if favorable circumstances coincide.
Naira’s fundamental drivers remain healthy
The Nigerian foreign exchange market responded positively after Nigeria was removed from the Financial Action Task Force’s (FATF) “grey list” of nations with potential for money laundering and terrorist financing.
- Investor confidence, foreign reserves, and the naira all reached record highs. As more dollar holders sell their holdings, the naira hit a 10-month high of N1,444.4/$ on Wednesday in the official markets.
- Positive market sentiment and expected investment inflows into the domestic economy are largely due to financial market reforms led by the Central Bank of Nigeria (CBN).
- Following Nigeria’s removal from the FATF grey list last week, the naira experienced significant gains.
This achievement reduces payment barriers for regional operators and creates opportunities for business growth and investment inflows. The country is expected to see an influx of foreign investment from various stakeholders, especially bank customers.
FATF identifies nations or jurisdictions with significant strategic deficiencies to combat money laundering, terrorist financing, and proliferation financing.
“The FATF calls on all members and urges all jurisdictions to apply enhanced due diligence for all countries identified as high-risk, and in the most serious cases, countries are called upon to adopt counter-measures to protect the international financial system from the ongoing risks of money laundering, terrorist financing, and proliferation financing emanating from the country,” the statement said.
Four countries have now met FATF’s requirements for delisting, improving their standing with international financial institutions and capital markets by strengthening enforcement against illicit financial flows and closing regulatory oversight gaps. Mozambique was added in October 2022, Burkina Faso in February 2021, and Nigeria and South Africa in February 2023. This milestone creates new opportunities.
CBN’s interventions
Central Bank of Nigeria (CBN) interventions have narrowed the gap between the official and parallel markets as FX liquidity injections and monetary easing continue, reducing speculation and boosting investor confidence.
Oil price resilience benefits Nigeria’s economy, which heavily depends on oil, as rising global crude prices, its main source of foreign exchange could increase foreign exchange inflows.
- Remittances to Nigeria and FX inflows are also rising amid easing global risks, with diaspora funds and potential portfolio investments in Naira assets.
- However, there are bearish risks, including inflation pressures—currently around 20.1% (down from 21.9% in July), which could reduce purchasing power and boost US dollar demand.
FX demand mismatches may occur if supply lags, leading to increased spreads due to ongoing import needs, international education expenses, and debt repayments. Global factors, such as the strength of the US dollar or volatility in British pound sterling (GBP/NGN at N1,890–2,030), may also exert indirect pressure on the Nigerian currency.
