Naira Mixed as Analysts Differ on FX Market Outlook
The naira traded on a mixed note against the US dollar in the in the foreign exchange markets amidst renewed move to defend the local currency. Spot rate was as low as N1535 per dollar in the currency market.
It was an aggressive December as the authority put weight behind the local currency with daily FX auctions that spanned four consecutive weeks. On First trading session in 2025, the naira exchange rate remained unchanged as FX market remains in solitary.
Exchange rate was N1538.23 per US dollar, according to FX spot data computed based on FMDQ closing rate approach using data from Bloomberg BMatch showed. In the parallel market, exchange rate improved to N1,650 per greenback, gaining N5 on the day as demand for FX eased.
On the last day in December, the naira appreciated to N1,538 following latest round of weekly US dollar auctions sales worth $107 million to banks by the monetary authority. The Central Bank of Nigeria (CBN) doubled down FX market interventions in the latter part of the year to reduce negative movement associated with year-end demand, curb speculative tendency driven by wide FX spread.
The move was in continuation of effort that started in November to ensure that exchange rate at year meet target. Series of FX auctions sales in the latter part of the year suggested the Apex Bank seek to meet a relative stable, better exchange rate target with the aim to improve its scorecard.
The CBN defended the naira, selling average of $400 million in November and December to authorised dealer banks at lower rates. Due to these flood of US dollar sales to banks, the market witnessed heightened activity and improved liquidity – spot rate was maintained below N1600 per greenback in Dec.
As market conditions remained active, exchange rates fluctuated within the N1,520– N1,550 range with improved liquidity.. Overall, the Naira appreciated by 13 bps, closing at $/₦1,535.00.
In the parallel market, exchange rate plunged to N1,650 per US dollar as demand pressure was witnessed in the informal currency market for invisible payment. Pressure mounted despite latest direction that allow Bureau de Change operators to access $25,000 from local banks at official rate with 1% cap on FX spread.
In its outlook for 2025, CardinalStone Partners hint that the case for Naira stability is now stronger than ever. The investment firm’s currency valuation places the naira’s fair value at approximately N1,720.88 per dollar.
“Our view on relative currency stability is supported by the introduction of the EFEMS platform, increasing foreign portfolio inflows, greater access to dollar-denominated debt, rising FX reserves, and a positive current account balance.”
On the other hand, Afrinvest Limited sets the weighted average exchange for the local currency at N1,804 per US dollar in 2025. Elsewhere, oil market was bearish but remained steady for the day as data revealed growth in Chinese manufacturing was offset by Nigeria’s plan to boost production next year.
Brent crude was valued at $73.92 per barrel, while WTI stood at about $70.95. Gold prices were set for an annual rise of over 26%, their largest yearly increase since 2010, driven by a demand for safe-haven assets and cuts in central bank interest rates.
Analysts believe that sentiment could become more cautious depending on potential policy changes under a second Trump presidency. It traded around $2,612.04 per ounce on Tuesday.
Nigeria’s foreign reserves recorded additional US dollars inflows this week, as the gross reserves level grew to USD40.884 billion. #Naira Mixed as Analysts Differ on FX Market Outlook Ministry Seeks $2 billion Fibre Optics Funding
