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The Nigerian naira depreciated by 2.31% (₦38.12) at the National Autonomous Foreign Exchange Market (NAFEM) on Monday, closing at ₦1690.37/$ compared to its previous close of ₦1652.25/$ last week.
Data from the FMDQ Exchange showed a sharp decline in daily turnover, which dropped 42% to $173.14 million from Friday’s $296.63 million. Meanwhile, in the parallel market, the naira appreciated slightly, closing at ₦1735/$ compared to ₦1740/$ in the previous trading session.
As of Friday, the naira had recorded a 1.59% week-on-week appreciation at ₦1652.25/$, buoyed by increased market activity. Average turnover in the NAFEM segment surged by 154.6% to $527.5 million week-on-week.
Foreign Reserves Show Growth
The Central Bank of Nigeria (CBN) reported a 0.5% week-on-week increase in foreign reserves, which rose to $40.2 billion as of November 13—the highest level since January 2022. However, analysts warn that structural challenges continue to exert pressure on the naira.
Economic Outlook Remains Cautious
In its Nigeria Macroeconomic Outlook 2025, Veriv Africa, a data insights firm, predicted sustained volatility in the exchange rate market. It noted that Nigeria’s failure to meet its 1.5 million barrels-per-day crude oil production quota, as set by the Organisation of the Petroleum Exporting Countries (OPEC), has disrupted the country’s trade balance, further straining the naira.
The report highlighted that inflation and limited export potential are key factors undermining the currency. “A high inflationary environment dampens non-oil exports, exacerbating naira depreciation. Poor aggregate supply and limited external reserves continue to strain foreign exchange inflow,” Veriv Africa stated.
The firm also cautioned that unless Nigeria significantly improves its foreign exchange inflow and rebuilds external reserves, the naira’s underperformance in 2024 is likely to persist into 2025.
Policy Recommendations
Veriv Africa urged the CBN to reassess its monetary policy strategy, emphasizing the need for supply-side interventions rather than a solely hawkish monetary stance. “Raising the Monetary Policy Rate (MPR) has not significantly reduced inflation, as supply-side challenges continue to drive price increases. A collaborative approach prioritizing productivity can sustainably control inflation while fostering economic growth and reducing unemployment,” the report suggested.
The report also highlighted the importance of diversifying Nigeria’s economy, especially by promoting productivity in the non-oil sector. Recommendations included:
- Establishing robust quality assurance and testing infrastructure for agricultural and metal exports.
- Increasing investment in affordable energy for manufacturing.
- Improving transport and storage infrastructure.
- Initiating export promotion activities in key international markets.
Role of Subnational Governments
The report further called on state governments to actively support economic diversification by implementing policies that harness their states’ competitive advantages. “Beyond financing, state governments must create enabling environments through targeted investments and infrastructure development to unlock productivity in their regions,” it noted.
Outlook
With no immediate signs of recovery for the naira, experts urge coordinated efforts between federal and state governments, the CBN, and private stakeholders to stabilize the foreign exchange market and foster sustainable economic growth.
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