Emmanuel OchayiThe Nigerian naira has experienced fluctuations in recent times, reflecting the country’s economic challenges. As of March 7, 2025, the naira was trading at approximately N1,498.98 per US dollar in the official market. By March 8, it had depreciated to N1,517.24, marking a decline of N18.26 over the week.
In the parallel market, the naira’s value dropped from N1,506 to N1,580 within the same period, a loss of N74. This depreciation is partly attributed to a decrease in Nigeria’s external reserves, which fell by $1.31 billion, standing at $38.42 billion on February 28, down from $39.72 billion at the end of January 2025.
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The naira’s decline against the US dollar has raised concerns among economists and policymakers. The official exchange rate moved from N1,498.98 to N1,517.24, while the black market rate saw a sharper decline from N1,506 to N1,580. This disparity between official and parallel market rates indicates underlying pressures in the foreign exchange market.
Factors Influencing the Naira’s Depreciation
Several factors have contributed to the naira’s recent depreciation:
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Declining Foreign Reserves: The reduction in external reserves limits the Central Bank of Nigeria’s (CBN) ability to support the naira.
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Inflationary Pressures: Rising inflation erodes the purchasing power of the currency, leading to depreciation.
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Global Economic Conditions: Fluctuations in oil prices and global economic trends impact Nigeria’s foreign exchange earnings.
Expert Insights on the Naira’s Outlook
To understand the naira’s trajectory for the week of March 10-15, 2025, Prime Business Africa consulted experts Dr. Dipo Adedoyin, Economist at the University of Lagos Business School, stated “The continuous decline in our foreign reserves is alarming. If this trend persists, we might see the naira trading at around N1,550 to N1,570 in the official market by the end of the week.”
Mr. Chinedu Okeke, Forex Analyst at GTBank, observed “The widening gap between the official and parallel market rates suggests increased demand for foreign currency outside official channels. Without intervention, the naira could hit N1,600 in the black market soon.”
Mrs. Funke Adeoye, Financial Consultant, noted “Inflationary trends are exerting pressure on the naira. To stabilize the currency, we need robust fiscal policies and measures to boost foreign investment.”
Potential Impact on the Nigerian Economy
The naira’s depreciation has far-reaching implications:
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Cost of Living: Imported goods become more expensive, increasing the cost of living for Nigerians.
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Business Operations: Companies reliant on imported materials face higher costs, potentially leading to increased prices for consumers.
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Foreign Debt Servicing: A weaker naira makes servicing foreign-denominated debts more costly for the government.
Government and CBN’s Response
In response to the currency challenges, the CBN has implemented measures such as restricting forex sales to Bureau De Change operators and promoting the use of the eNaira, Nigeria’s digital currency. Additionally, the government is exploring policies to enhance non-oil revenue streams and reduce dependence on oil exports.
Looking Ahead: March 10-15, 2025
Based on current trends and expert opinions, the naira is expected to face continued pressure in the coming week. Factors such as foreign reserve levels, inflation rates, and global economic conditions will play pivotal roles in determining the currency’s performance. Stakeholders will be keenly observing the CBN’s policy decisions and any government interventions aimed at stabilizing the naira.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
