After a brief period of relative stability, the Nigerian Naira experienced a notable depreciation in the parallel market, closing at ₦1,630/$1 on Friday, May 30, 2025. This marks a significant shift from the consistent ₦1,620/$1 rate observed earlier in the week. The local currency also weakened against the British pound, ending the week at ₦2,190/£1, up from ₦2,170/£1 on Thursday and ₦2,165/£1 on Wednesday, indicating a steady depreciation trend throughout the week.

In contrast, the previous week saw the Naira appreciate in the parallel market, rising to ₦1,620/$1 on Thursday from ₦1,625/$1 on Wednesday, maintaining that level from Tuesday. It had earlier closed at ₦1,627/$1 on Monday, according to market sources in Lagos.

Official Market Shows Mixed Signals

In the official market, the Naira exhibited a mixed trend. It closed at ₦1,585.5/$1 on Friday, a modest appreciation from ₦1,587/$1 on Thursday. Central Bank of Nigeria (CBN) data indicates that the currency closed at ₦1,592/$1 on Wednesday, slightly down from ₦1,590/$1 on Tuesday, and opened the week at ₦1,583/$1 on Monday.

OPEC+ Production Increase Adds Pressure

Adding further pressure on the Naira, the Organization of the Petroleum Exporting Countries and its allies (OPEC+), the world’s largest oil producers, announced a planned increase of 411,000 barrels per day in production for July 2025. This decision marks the third consecutive monthly hike since April, as part of a strategic effort by leading producers like Saudi Arabia and Russia to regain global market share and discipline overproducing members such as Iraq and Kazakhstan. Despite rising supply potentially pressuring oil prices, OPEC+ cites a stable global economic outlook and healthy market fundamentals, including low oil inventories, as justification for the increase. Total announced or implemented increases since April now amount to 1.37 million barrels per day, or 62% of the 2.2 million barrels per day targeted to return to the market.

Global Oil Prices and Naira’s Outlook

The increase in oil production by OPEC+ could suppress global oil prices if demand growth underperforms or inventories remain stable—posing further risk to Nigeria’s foreign exchange earnings and increasing pressure on the already volatile Naira. Oil prices have dropped to a four-year low in April but have since stabilized just below $63 per barrel. Global oil demand is projected to grow by around 740,000 to 775,000 barrels per day in 2025.

AfDB Projects Naira Depreciation

The African Development Bank (AfDB) has projected that the Nigerian Naira will depreciate by at least 6% between 2025 and 2026, attributing this to growing volatility in global financial markets. The forecast, contained in the African Economic Outlook 2025, reveals the potential instability of African currencies amid global economic uncertainty. This projection comes just a week after CBN Governor Olayemi Cardoso claimed that volatility in Nigeria’s foreign exchange (FX) market had dropped to below 0.5%, suggesting improved market conditions—a claim now challenged by recent market realities.

Implications for Nigeria’s Economy

The recent depreciation of the Naira in the parallel market, coupled with the projected increase in oil production by OPEC+, presents significant challenges for Nigeria’s economy. The potential for suppressed global oil prices could lead to reduced foreign exchange earnings, further straining the country’s fiscal position. Additionally, the projected depreciation of the Naira by the AfDB underscores the need for robust economic policies to mitigate the impact of global financial market volatility.

Conclusion

The Nigerian Naira’s recent performance in both the parallel and official markets reflects the complex interplay of domestic and international economic factors. The planned increase in oil production by OPEC+ and the projected depreciation of the Naira by the AfDB highlight the challenges facing Nigeria’s economy. Addressing these issues will require coordinated efforts by policymakers to implement strategies that enhance economic resilience and stability.