The Nigerian naira continued its downward slide against the United States dollar on Tuesday, May 6, 2025, as it closed at ₦1,609/$1 in the official foreign exchange market. This marks a ₦4 depreciation from Monday’s closing rate of ₦1,605/$1, according to data published by the Central Bank of Nigeria (CBN).
This latest dip highlights the persistent pressure on the nation’s currency, driven by a widening gap between foreign exchange demand and supply. Despite ongoing efforts by the apex bank to inject liquidity and stabilize the market, the naira has struggled to maintain its footing.
In the parallel market, the naira also lost ground, closing at ₦1,615/$1, a ₦10 drop from Monday’s ₦1,605/$1 rate. The narrowing margin between the official and black market rates suggests intensified speculative trading and increasing difficulties for individuals and businesses seeking access to foreign currency through authorized channels.
CBN interventions and policy reforms face near-term challenges
The CBN has introduced several policy measures in recent months to boost investor confidence and encourage inflows into the official foreign exchange market. Notably, reforms such as the unification of exchange rates, the introduction of an electronic FX matching platform, and the tightening of monetary policy have been applauded for bringing increased transparency and efficiency.
Despite the latest depreciation, financial analysts continue to highlight the relative stabilization of the foreign exchange landscape since these reforms took effect. The convergence of rates between official and unofficial markets has significantly curtailed arbitrage opportunities, which were previously a major source of distortions in the FX market.
Fitch revises Nigeria’s outlook to Stable
In a show of confidence in the country’s economic direction, Fitch Ratings recently upgraded Nigeria’s sovereign outlook from Negative to Stable. The rating agency attributed the improved outlook to the Tinubu administration’s commitment to structural reforms and policy discipline.
Fitch cited the launch of the electronic foreign exchange platform and the implementation of a revised FX code as important milestones toward restoring investor trust and enhancing transparency. The agency also praised Nigeria’s ongoing monetary policy tightening, aimed at curbing inflation and stabilizing the naira.
These developments come as Nigeria pursues broader macroeconomic stabilization objectives, including reducing fiscal deficits, increasing foreign direct investment, and improving the balance of payments. Analysts believe that while short-term volatility in the exchange rate remains likely, the foundation is being laid for more sustainable long-term stability.
CBN governor reassures stakeholders of policy direction
Central Bank Governor Olayemi Cardoso has reiterated the apex bank’s commitment to economic stability and currency reform. Speaking at a recent policy forum, Cardoso emphasized that the CBN remains focused on improving liquidity, promoting financial inclusion, and enhancing policy transparency.
He also noted the growing international interest in Nigeria, describing it as a vote of confidence in the country’s reform momentum. Cardoso stated that the bank would continue to monitor developments closely while adjusting its strategies to ensure long-term stability in the foreign exchange market.
Looking ahead
While the naira’s latest depreciation underscores the fragility of Nigeria’s FX market in the face of structural constraints, the ongoing convergence of exchange rates and the global recognition of Nigeria’s reforms offer a measure of optimism. Investors, policymakers, and observers agree that sustained reform implementation will be crucial in reversing the naira’s fortunes and achieving currency stability in the months ahead.
