MARKET NEWS

The naira recorded a slight depreciation across the foreign exchange (FX) market on Wednesday as renewed dollar demand, driven by summer travel plans, resurfaced.

By the close of trading at the parallel market, popularly referred to as the black market, the naira weakened by 1.2% to close at N1,550 per dollar, compared to N1,532 quoted the last week. This represents a N18 loss against the greenback.

At the official Nigerian Foreign Exchange Market (NFEM), data published by the Central Bank of Nigeria (CBN) showed that the local currency also depreciated slightly. The dollar was quoted at N1,534.52 on Wednesday, compared to N1,533.18 quoted on Tuesday, indicating a marginal N1.34 drop.

Traders attributed the mild depreciation to increased demand from end-users planning to travel abroad for summer holidays. Despite the current pressure, the naira has shown relative stability in recent months, supported by the policy measures implemented by the CBN.

A new report by United Capital Research noted that improved sentiment could drive further stability in the FX market, with potential for naira appreciation. The firm projects the naira to close 2025 within the N1,490–N1,520 per dollar range.

Uche Uwaleke, Professor of Capital Market and President of the Capital Market Academics of Nigeria, said the naira is trading around N1,533 per dollar in the official market and approximately N1,530–N1,537 in the parallel market, suggesting a near convergence between the two rates.

However, analysts at Renaissance Capital estimate that even with the current convergence, the naira remains overvalued by about 26% when compared to its historical real effective exchange rate average.

“While the naira appears slightly overvalued, its relative stability, backed by recent reforms, may support investor confidence in H2 2025,” Uwaleke stated during his presentation at the Arthur Steven Asset Management (ASAM) Webinar Series on Wednesday.

Similarly, a report by Coronation noted that the Nigerian Autonomous Foreign Exchange Market (NAFEM) reference rate appreciated marginally to N1,533.18 per dollar.

The firm reiterated its outlook for the market rate to hover between N1,500 and N1,600 per dollar, supported by increased foreign portfolio investor (FPI) participation and growing confidence in the Central Bank’s reforms.