After months of turbulence in the foreign exchange market, the Nigerian naira has shown signs of relative stability in recent weeks — trading around ₦1,466.65 per US dollar at the official Nigerian Foreign Exchange Market (NFEM). However, despite this encouraging development, many analysts warn that the naira’s newfound calm is fragile and could easily be disrupted if underlying economic challenges are not addressed.
Across Lagos, Abuja, and other commercial hubs, the naira’s value in the parallel (or black) market continues to hover between ₦1,490 and ₦1,500 per dollar. The narrowing gap between the official and unofficial exchange rates suggests that government policies to unify the market and improve liquidity may be working. Yet, ordinary Nigerians remain skeptical — as the cost of goods and services remains high despite the apparent currency stability.
A Brief Overview of the Naira’s Journey
The naira’s current situation is the result of a long and often painful journey. Since 2023, Nigeria has implemented a series of monetary reforms designed to liberalize the forex market and attract foreign investment. The Central Bank of Nigeria (CBN) under its new leadership has aimed to close the gap between the official and parallel exchange rates through a managed float system.
Initially, the reforms led to sharp volatility. The naira lost significant value after the removal of fuel subsidies and the unification of the exchange rate system. The adjustment was painful for import-dependent sectors and led to inflationary pressures across the economy.
However, by mid-2025, signs of recovery began to emerge. With an increase in oil exports, improved foreign reserves, and better policy coordination between the CBN and the Ministry of Finance, the naira began to stabilize. According to recent figures, Nigeria’s foreign reserves now stand at over $42 billion, the highest in nearly four years. This has provided the CBN with the ammunition to defend the naira and restore market confidence.
Central Bank Strategy: Stability Over Speculation
The Central Bank’s primary focus this quarter has been maintaining exchange-rate stability while gradually easing monetary policy to stimulate growth. On September 23, 2025, the CBN cut its policy interest rate by 50 basis points — from 27.5% to 27%, marking the first rate cut since 2020.
Governor Olayemi Cardoso emphasized that the Bank’s goal was to strike a balance between curbing inflation and encouraging investment. He noted that “sustained stability in the exchange rate is essential for investor confidence and long-term economic planning.”
The CBN’s intervention strategies include:
- Tight monitoring of speculative activity in the forex market.
- Improved transparency in dollar allocations to commercial banks.
- Targeted interventions for importers of essential goods.
- Encouragement of diaspora remittances through official channels.
These actions have helped to calm market sentiment. The World Bank and the African Development Bank have both praised Nigeria’s “improved policy coordination” and credited these measures with restoring a degree of predictability to the economy.
The Market Reality: Mixed Feelings Among Traders
Despite the positive headlines, not everyone is convinced that the naira’s stability is sustainable. In the Balogun Market in Lagos Island, currency traders still report fluctuations of ₦5 to ₦10 per dollar daily.
“I can say the naira is better than before, but it’s not yet stable,” said a trader identified as Ifeanyi, who has been in the business for 12 years. “Sometimes, banks say they don’t have dollars to sell, and we have to adjust our prices.”
Small business owners are also feeling the strain. For importers of electronics, textiles, and spare parts, exchange-rate volatility has made it difficult to plan inventory or set fixed prices. Many complain that while the CBN rate looks stable on paper, access to foreign currency remains limited.
Why the Naira Stabilized — and Why It Could Falter Again
Experts attribute the current calm to several short-term factors, including:
- Increased oil revenue: Crude oil prices have hovered above $90 per barrel, providing a steady flow of foreign exchange.
- Stronger reserves: With over $42 billion in foreign reserves, the CBN has been able to intervene effectively.
- Reduced panic buying: Businesses and investors have adjusted to the new FX regime and are holding fewer speculative positions.
- Policy coordination: Fiscal and monetary policies are finally aligned toward a common goal of stabilization.
However, the sustainability of these gains remains uncertain. If oil prices fall or foreign investment slows, the naira could quickly lose ground again. Inflation also remains a major risk — as food and transport costs continue to rise. Even with a relatively stable naira, purchasing power remains weak, and consumer confidence is low.
Another concern is Nigeria’s reliance on imports. The country still spends billions of dollars annually on importing refined petroleum products, machinery, food items, and raw materials. Until local production increases, the pressure on the naira will persist.
Public Sentiment and Economic Outlook
For the average Nigerian, currency figures are less important than what they mean for daily life. Despite stabilization, prices of goods have not dropped. A bag of rice still sells for around ₦70,000, and cooking gas prices remain high.
Economists argue that currency stability must translate into tangible benefits for it to be meaningful. “If the naira holds firm, inflation should begin to decline in the next two quarters,” said Dr. Temi Olorunfemi, an economist based in Abuja. “But that depends on whether government policies continue to prioritize price stability and domestic production.”
The federal government has promised further reforms to boost agricultural output and manufacturing. President Tinubu’s administration insists that the country is on a path toward recovery, pointing to improved GDP growth and falling debt ratios. But for many Nigerians, patience is wearing thin.
Conclusion: A Delicate Balance Ahead
The naira’s recent performance offers cautious optimism. After years of freefall, the currency’s stability signals that Nigeria’s economic reforms are beginning to bear fruit. However, this stability remains delicate — anchored on oil revenue, policy discipline, and investor confidence.
The road to a strong and resilient naira is long. Sustainable improvement will depend on structural reforms: boosting exports, cutting import dependence, strengthening local industries, and ensuring transparency in monetary policy. Until then, the naira’s journey will continue to be a story of fragile progress — one step forward, one eye on the market.
Written by: LuchiInter News Desk
Sources: Reuters, Vanguard, BusinessPost, CBN Reports, Africa Business Insider.
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