The Nigerian naira ended the trading week on a slightly firmer note against the U.S. dollar, closing at ₦1,599.01/$1 in the official foreign exchange market on Friday, according to data from the Central Bank of Nigeria (CBN). This modest appreciation from Thursday’s rate of ₦1,599.99/$1 underscores the local currency’s ongoing struggle for stability amid a volatile economic environment.

During Friday’s trading session, the naira exhibited notable intra-day swings, with the exchange rate fluctuating between a high of ₦1,603.50/$1 and a low of ₦1,597.00/$1. These movements highlight persistent uncertainty in the market, but they also point to the naira’s developing resilience, supported by ongoing central bank interventions.

Naira Holds Steady Throughout the Week

Throughout the week, the naira maintained relative stability in the official market, reflecting a consistent range of exchange values:

• Monday: ₦1,597.70/$1

• Tuesday: ₦1,599.75/$1

• Wednesday: ₦1,596.01/$1

• Thursday: ₦1,599.99/$1

• Friday: ₦1,599.01/$1

The pattern indicates that the naira, while still under pressure, avoided sharp declines and managed to hover within a narrow band over the five-day period.

Parallel Market Depreciates Slightly

In contrast, the parallel market, which caters to informal currency exchanges, saw mild depreciation. Street traders at the ever-busy Wuse Zone 4 in Abuja reported that the naira was exchanging at ₦1,632/$1 on Friday—a slight drop from ₦1,625/$1 on Thursday.

Earlier in the week, the black-market rate had opened at ₦1,633/$1 on Monday, climbed to ₦1,635/$1 on Tuesday, before dipping to ₦1,625/$1 on Wednesday. However, data from Frontpage News later showed a marginal uptick, quoting the rate at ₦1,628/$1 on Friday.

According to currency traders and analysts, the mild depreciation in the parallel market stemmed from a temporary increase in dollar demand, driven primarily by importers and other short-term forex seekers who could not access sufficient liquidity through official channels.

Signs of Gradual Recovery Amid CBN Reforms

Despite these fluctuations, financial analysts believe that the naira is showing early signs of gradual recovery. Much of the current optimism stems from the Central Bank of Nigeria’s strategic policy interventions to improve market transparency, ease forex restrictions, and attract foreign capital.

Market participants point to the CBN’s increasing willingness to liberalize the foreign exchange regime as a potential turning point. These reforms, although still in the early stages, are seen as crucial in closing the gap between the official and parallel market rates.

Inflation Rate Eases, Giving Room for Optimism

Adding to the sense of cautious optimism is a slight dip in Nigeria’s headline inflation rate, which fell from 24.23% in March to 23.71% in April 2025, according to the latest report from the National Bureau of Statistics (NBS).

Although the drop of 0.52 percentage points may appear modest, it marks the first decline in several months and offers some respite to consumers battling persistent price hikes across goods and services.

Analysts have described this inflation slowdown as a positive development, particularly at a time when Nigeria is trying to balance macroeconomic tightening with efforts to spur growth and attract investment.

External Reserves Record First Sustained Gain in 2025

Further reinforcing investor confidence, Nigeria’s external reserves posted their first consistent rise this year. From April 30 to May 14, reserves grew by $364 million, increasing from $37.934 billion to $38.298 billion, representing a 0.96% gain.

This upward trend is particularly significant, as reserves had previously been on a steady decline after peaking at $40.92 billion on January 6, 2025.

Analysts attribute this reversal to the CBN’s reinvigorated foreign exchange management strategy, which includes tighter monitoring of forex outflows and increased engagement with international investors. These efforts are gradually restoring market confidence and liquidity, two elements essential for long-term currency stability.

Focus Turns to May MPC Meeting

The financial market now turns its attention to the upcoming Monetary Policy Committee (MPC) meeting, scheduled for May 19–20, 2025. This meeting is widely anticipated, as it will determine the country’s monetary policy stance amid recent gains in foreign reserves and a slight easing in inflation.

At its previous meeting in February, the MPC held the Monetary Policy Rate (MPR) at 27.50%, maintaining its hawkish position in a bid to curb inflation and stabilize the naira.

With new data suggesting early economic improvements, policymakers may now weigh the benefits of maintaining current rates against the need to stimulate economic growth. While many analysts expect the CBN to maintain a cautious tone, there is increasing speculation that sustained reserve growth and inflation easing could pave the way for more accommodative measures in the second half of the year.

Conclusion: Mixed Signals, but Cautious Optimism

In summary, the naira’s marginal appreciation in the official market, combined with a decline in inflation and a rise in foreign reserves, suggests that recent policy reforms may be beginning to take effect.

However, continued weakness in the parallel market underscores the need for deeper reforms and better alignment between official and informal exchange rates. Until such harmonization is achieved, exchange rate volatility will likely persist.

As Nigeria approaches the crucial MPC meeting, both domestic and foreign stakeholders will be watching closely to assess whether the current momentum can be sustained or if further interventions will be needed to consolidate the early signs of economic recovery.