The Nigerian currency showed slight gains in the unofficial market but lost some value in the official market.
The Nigerian Naira appreciated to N1,470/$ in the parallel market on Friday, up from N1,475/$ on Thursday, but in the Nigerian Foreign Exchange Market (NFEM), it depreciated to N1,445.9/$.
Data from the Central Bank of Nigeria (CBN) indicated that the Naira’s exchange rate depreciated to N1,445.9/$ from N1,442/$ on Wednesday, reflecting a N3.9/$ depreciation.
2025 Overview: The Naira has gained roughly 7 per cent against the American dollar year-to-date (YTD), from an average of N1,607/$ in early 2025 to current levels. This reverses a portion of the 2024 losses (41 per cent depreciation).
Monthly Trend: November saw an increase of 0.79 percent, with a weekly range of N1,441/$–N1,472/$.
Historical Context: The average rate is N1,532/$ this year. While January saw the highest at N1,607/$, early November saw the lowest value at N1,421/$.
Nigeria’s foreign reserves have risen to $46.7 billion, highlighting the positive impact of ongoing CBN reforms on stabilizing the economy and strengthening the naira.
Nigeria’s Foreign exchange reserves cover more than ten months of imports and greatly enhance the country’s external buffers amid a 16.05 percent inflation rate in October, alongside other macroeconomic indicators showing renewed momentum that could benefit businesses and foster more sustainable growth.
The IMF, in its Balance of Payments Manual (5th edition), defines external reserves as assets easily accessible to a nation’s monetary authorities, used to finance balance of payments deficits and influence economic stability.
According to the CBN, Nigeria’s foreign reserves are at their highest since 2018, driven by increased oil revenue, strong balance-of-payments inflows, and returning foreign and portfolio investment. This reserve level provides significant security for the country’s foreign exchange needs and intervention abilities, covering more than ten months of imports.
Remittances and Inflows: Liquidity has been made easier by consistent diaspora transfers and inflows into government securities, particularly during the holiday season. CBN Policies: Monetary easing and dollar sales are two examples of interventions that have reduced volatility.
The official benchmark is the volume-weighted average, or NFEM rate.
U.S dollar index turns green after three days of losses
The US Dollar Index (DXY), which compares the dollar to six major currencies, was steady at 99.60 on Friday during London hours after three days of losses.
- However, as expectations of a rate cut by the Federal Reserve (Fed) in December grow, the dollar could weaken further.
- Reports suggest Kevin Hassett, director of the White House National Economic Council, is likely to become the next Fed chair, leading traders to anticipate three more rate cuts by 2026. Hassett is perceived as favoring lower interest rates aligned with President Donald Trump’s policies.
- According to the CME FedWatch Tool, there is now an over 87 per cent chance the Fed will cut its benchmark rate by 25 basis points at its December meeting, up from 39 per cent last week.
Additionally, the US Department of Labor reported that initial jobless claims fell to 216,000. Meanwhile, demand for the dollar as a haven has declined amid ongoing peace negotiations between Russia and Ukraine.
Russian President Vladimir Putin expressed openness to further talks and indicated that suggestions from US President Donald Trump could influence future agreements. Ukrainian President Volodymyr Zelenskiy said that a framework discussed in Geneva will be refined this week at a meeting between Ukrainian and US delegations.
