Nigeria’s local currency, the naira, saw a modest appreciation against the U.S. dollar on Wednesday, reversing losses from the previous trading day across both the official and parallel foreign exchange markets.
The gain comes amid ongoing fluctuations in the country’s foreign exchange landscape, which continues to impact trade, customs operations, and investor confidence. Market observers view Wednesday’s currency performance as a sign of resilience despite broader economic headwinds.
Naira Gains at Parallel Market
In Abuja’s Wuse Zone 4, a well-known hub for foreign exchange activity, Bureau de Change operator Abubakar Alhasan confirmed that the naira traded at N1,615 per dollar on Wednesday—an improvement from N1,620 recorded on Tuesday.
“The naira appreciated by five naira today compared to yesterday. We sold at N1,620 on Tuesday but by this afternoon, the rate came down to N1,615. The demand wasn’t as aggressive, so that helped,” Alhasan said in an interview.
This N5 gain at the black market level marks a small but noteworthy shift, especially considering the volatility that has characterized Nigeria’s foreign exchange environment in recent months.
Modest Appreciation at Official Market
Similarly, data from the Nigerian Autonomous Foreign Exchange Market (NAFEM) shows that the naira posted a marginal gain at the official window as well. On Wednesday, the local currency closed at N1,602.30 to the dollar—an improvement from Tuesday’s rate of N1,602.63.
Though the gain was a slight N0.33, it reflects a continued effort by fiscal and monetary authorities to stabilize the currency, especially following recent reforms aimed at unifying Nigeria’s multiple exchange rates and encouraging transparency in the FX market.
Forex Volatility Still a Major Concern
Despite Wednesday’s gains, stakeholders in the economic sector remain wary of the naira’s long-term stability, especially given the persistent volatility in foreign exchange rates. This concern was echoed by the Comptroller-General of the Nigeria Customs Service (NCS), Bashir Adewale Adeniyi, during a press briefing on Tuesday.
Speaking on the challenges facing the agency in the first quarter of 2025, Adeniyi highlighted the sharp fluctuations in exchange rates as a key operational hurdle.
“Chief among these was exchange rate volatility, which continued to affect trade patterns and customs valuation,” he said.
According to Adeniyi, the first quarter alone witnessed a staggering 62 changes in the exchange rate used for customs valuation. He disclosed that rates during this period ranged from a low of N1,477.72 to a high of N1,569.53 per dollar, with an average exchange rate of N1,521.59.
“These inconsistencies significantly impacted our ability to maintain predictable customs duties and accurate import valuations, affecting both government revenue and private sector planning,” the Customs boss added.
Policy Reforms and Market Sentiment
The Central Bank of Nigeria (CBN) has implemented several reforms over the past year in a bid to stabilize the naira and narrow the gap between the official and parallel market rates. These reforms include the unification of exchange rate windows and liberalization of the foreign exchange market.
While these measures have attracted cautious praise from investors and international financial institutions, challenges remain, especially in terms of forex supply and confidence among currency traders.
A financial analyst based in Lagos, Mrs. Zainab Akinlade, explained that Wednesday’s appreciation, though minor, reflects a market adjusting to regulatory changes.
“We are seeing the naira claw back some value, and that’s encouraging,” she said. “But what the market really needs is consistent access to foreign currency, especially for importers and investors.”
Akinlade further noted that improvements in oil earnings and remittances, coupled with the Federal Government’s fiscal discipline, could provide the boost needed to support the naira in the medium term.
Traders Call for Long-Term FX Stability
Despite the slight gains, traders and forex market participants have called for more stable policies and better access to foreign exchange. Some believe that until the government addresses structural challenges, any appreciation will be short-lived.
“There are too many uncertainties in the market,” said Isa Mohammed, another Bureau de Change operator in Lagos Island. “Today we gain N5, tomorrow we lose N10. Businesses can’t plan that way. What we need is predictability.”
He urged the CBN and the Ministry of Finance to engage stakeholders more directly and implement long-term strategies that ensure consistent FX availability.
Customs Revenue Impacted by FX Swings
The impact of foreign exchange instability extends beyond financial markets. Customs officials say it directly affects import valuation, duty collection, and revenue projections.
“When the rates fluctuate unpredictably, importers hold back shipments or delay clearing goods, which affects trade volume and revenue collection,” an NCS officer who spoke on condition of anonymity explained.
This development has raised concerns over the country’s fiscal stability, as customs duties form a significant component of non-oil government revenue.
Way Forward: Structural Reforms and Investor Confidence
Economic analysts suggest that Nigeria must prioritize building confidence in its currency and financial institutions. This includes enhancing foreign exchange reserves, encouraging foreign direct investment (FDI), and implementing clear, transparent policies that foster investor trust.
“The gains we’re seeing are small but important. However, they must be backed by structural improvements—both in policy and practice,” said Dr. Kelechi Umeadi, a monetary economist at the University of Abuja.
He stressed the importance of a coordinated strategy between the CBN, Ministry of Finance, and trade-related agencies like Customs to ensure a stable macroeconomic environment.
Conclusion
While Wednesday’s gains in the value of the naira—both in the official and parallel markets—offer a glimmer of hope, Nigeria’s currency still faces significant headwinds. Exchange rate volatility, forex shortages, and global economic pressures continue to challenge the country’s efforts at financial stabilization.
The road ahead will require deliberate fiscal and monetary coordination, transparent policies, and above all, trust from market participants. For now, the modest appreciation offers a brief reprieve—but the larger work of achieving long-term currency stability is far from over.
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