Nigeria’s local currency, the naira, slipped further against the United States dollar at the parallel market on Friday, closing the week with a negative performance despite a marginal gain at the official exchange window.
According to findings by Africalivenews, the naira depreciated to N1,635 per dollar on Friday, May 17, 2025, down from N1,625 per dollar recorded the previous day at the black market — a loss of N10 within 24 hours.
A Bureau de Change (BDC) operator, Abubakar Alhasan, who operates from the popular Wuse Zone 4 axis in Abuja, confirmed the prevailing rates during a brief interaction.
“On Friday, we buy the dollar at N1,625 and sell at N1,635,” Alhasan said. “There was more demand from travelers and importers towards the weekend, which affected supply and pushed the rate higher.”
Official Market Sees Slight Improvement
Meanwhile, in contrast to the parallel market trend, the naira recorded a slight appreciation at the official Nigerian Autonomous Foreign Exchange Market (NAFEM), according to data published by the Central Bank of Nigeria (CBN).
The official exchange rate stood at N1,598.72 per dollar on Friday, improving marginally from N1,599.32 recorded on Thursday. This represents a modest gain of 60 kobo for the naira.
The dual performance underscores the persistent volatility in Nigeria’s forex market, where the disparity between the parallel and official rates continues to reflect underlying supply constraints and speculative pressure.
Weekly Performance Mixed Amid Market Uncertainty
Throughout the trading week, the naira experienced mixed outcomes, alternating between gains and losses at both the official and black market segments. Analysts attribute this to a blend of factors including liquidity challenges, monetary policy expectations, and global currency dynamics.
A financial analyst, Idris Afolabi, explained that while the CBN has made efforts to boost supply and stabilize the currency, market confidence remains shaky due to lingering inflation and speculative behavior.
“We’ve seen a more active CBN in recent months with interventions and FX inflows, but the demand pressure in the informal market is still high,” Afolabi said. “A lot of businesses still source dollars outside the official window, and this drives the gap.”
He added that next week’s Monetary Policy Committee (MPC) meeting could provide fresh direction for the markets, particularly regarding interest rates and inflation control.
Inflation Data Brings Mild Relief
In a somewhat positive development, Nigeria’s headline inflation rate eased slightly in April 2025, bringing temporary relief to policymakers and consumers alike. According to the National Bureau of Statistics (NBS), inflation dropped to 23.70% in April from 24.20% in March.
This marks the first decline in the inflation figure in several months and is viewed as a sign that recent monetary tightening measures may be starting to yield results.
Economic analysts, however, remain cautious about declaring a sustained trend, noting that food inflation and energy costs remain elevated.
“The moderation in inflation is welcome, but it’s not yet time to celebrate,” said Titi Olumide, a Lagos-based economist. “Prices of basic goods and services are still rising faster than incomes, and any naira depreciation only compounds the problem.”
All Eyes on the CBN’s Next Move
With the latest inflation data now in view, all eyes are on the CBN’s Monetary Policy Committee, which is scheduled to meet on May 19 and 20, 2025. Market participants are watching closely to see whether the central bank will maintain its hawkish stance or opt for a pause.
In its last meeting in February 2025, the MPC retained Nigeria’s benchmark Monetary Policy Rate (MPR) at 27.50%, citing the need to continue taming inflation and supporting macroeconomic stability.
Recent commentary from CBN officials suggests that the apex bank remains committed to a tight monetary stance until inflation decelerates further and currency volatility subsides.
“The Central Bank has made price stability its top priority,” a senior CBN official, who preferred not to be named, told Africalivenews. “We’re closely monitoring both domestic and international indicators before making any policy shifts.”
Market watchers expect the MPC to weigh several factors, including recent inflation data, exchange rate fluctuations, fiscal pressures, and global interest rate trends, before making its decision.
Implications for the Economy and Nigerians
The depreciation of the naira at the black market has immediate implications for a range of economic activities, from import pricing and business costs to school fees payments and travel expenses.
For small business owners who rely on imported goods, every naira lost to exchange rate weakness translates to higher operational costs, which are often passed on to consumers.
“Just last month, I paid N1,520 per dollar for some electronics,” said Chidi Nwankwo, an electronics importer in Lagos. “Now it’s N1,635. Prices keep going up, and customers are complaining, but there’s little we can do.”
Similarly, Nigerian students studying abroad and families supporting them are feeling the pinch, with tuition and living costs becoming increasingly unaffordable due to the currency’s persistent weakness.
“My daughter is in the UK, and I send her money monthly,” lamented Mrs. Hauwa Suleiman, a civil servant in Abuja. “This new exchange rate is killing us. I don’t know how much longer we can sustain this.”
Outlook Remains Uncertain
While the slight appreciation at the official window is a positive sign, economists say the broader outlook for the naira remains uncertain, especially as global oil prices fluctuate and Nigeria’s forex reserves remain under pressure.
The Central Bank has continued to encourage non-oil forex inflows, particularly through diaspora remittances and foreign direct investment. However, until market fundamentals improve and supply significantly increases, the gap between the official and parallel market rates is likely to persist.
“We need deeper reforms, not just short-term measures,” said Professor Adeyemi Falana, an economist at the University of Ibadan. “The structural issues driving dollar demand—such as import dependence, weak industrial base, and policy inconsistency—must be addressed holistically.”
