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Naira depreciates by 2.5% as reserves close flat - BUSINESSDAY
The naira depreciated by 2.5 percent against the dollar in the official foreign exchange (FX) market in March 2025, as external reserves closed the month flat.
The naira depreciated by 2.5 percent against the dollar in the official foreign exchange (FX) market in March 2025, as external reserves closed the month flat.
According to data from the Central bank of Nigeria (CBN), the naira ended the month at N1,536.82 per dollar on Friday, the last trading day in March 2025, marking a loss of N37.84 compared to N1,498.98 quoted at the beginning of the month, at the Nigerian Foreign Exchange Market (NFEM).
Nigeria’s external reserves closed flat at $33.33 billion as of March 27, 2025 from $38.36 billion recorded at the beginning of the month on March 3, 2025, data from the CBN indicated.
The data revealed that the country recorded $1.91 billion direct remittance inflows in 2024, lower than $1.98 billion recorded in 2023, by 3.5 percent.
Debt payment rose to a four-year high of N4 65 billion at the end of 2024, reflecting the Federal Government’s continuous reliance on borrowing.
The naira gained N30 in the black market at the end of the month under review, same as the end of the week. After trading on Friday, the naira gained 1.9 percent as the dollar was quoted at N1,550 compared to N1,580 quoted on Friday last week in the parallel market, also known as black market.
During the month under review the naira appreciated in the black market but depreciated in the official market as demand for dollars moved to the NFEM.
Bala Bello, a member of the Monetary Policy Committee (MPC) said a substantial portion of FX demand has migrated to the official window, thus reducing speculative demand and allowing market forces to play a more significant role in exchange rate determination. As confidence in the revised framework grows, the positive implications for domestic price stability are expected to gradually unfold.
Against the backdrop of tight liquidity management and the recent modification of the foreign exchange management strategy, the naira exchange rate has demonstrated relative stability, with considerable appreciation, he said. The revised FX management strategy, which includes the adoption of the Electronic Foreign Exchange Matching System (EFEMS) and the Nigeria Foreign Exchange Code, to enhance transparency, ethics and credibility in the market, is gradually yielding desired outcomes.
Bandele Amoo, member of the MPC said portfolio inflows as at end-February 2025, remain high, recording positive net inflows . The external reserves is estimated to be about US$39,839.79million at end-February 2025, from US$38,706.99million at the end of January 2025, mainly, due to improved crude oil production and stability in the FX market following several reforms by the CBN. Other factors include expected reduction in import demand pressures arising from the full deregulation of the downstream oil sector, reduced importation of petroleum products , increased inflows and other newly introduced measures by the CBN.
