Naira Vs Dollar: What To Expect In March

The Nigerian naira continues to struggle against the US dollar as the country approaches March 2025. As reported by Prime Business Africa, In the parallel market, the naira recently closed at N1,500 per dollar, reflecting the persistent volatility and scarcity of foreign exchange. Analysts and market observers have raised concerns over the currency’s future as demand for dollars continues to rise while supply remains limited. With businesses and individuals scrambling to secure foreign exchange, the naira’s stability remains a critical issue for the economy.

The week leading up to February 28, 2025, saw fluctuations in the exchange rate, with the naira trading between N1,480 and N1,502 per dollar in the black market. The official market mirrored this instability, with the Central Bank of Nigeria (CBN) reporting N1,496 per dollar on Thursday, slightly depreciating from N1,495 the previous day. The continued pressure on the local currency raises concerns about Nigeria’s monetary policies and the ability of the government to intervene effectively.

Why the Naira Is Under Pressure

Experts believe that multiple factors contribute to the naira’s depreciation. One key issue is the decline in Nigeria’s foreign reserves, which dropped by $41.57 million between Monday and Wednesday. This reduction has limited the CBN’s ability to intervene in the forex market, further weakening confidence in the naira.

Another major factor is the high demand for dollars among businesses and importers. With Nigeria relying heavily on foreign goods and services, the pressure on the local currency continues to grow. Market speculators have also played a role in the naira’s instability, as traders look to profit from currency fluctuations.

READ ALSO: Naira Falls To N1,500 per Dollar As FX Scarcity Worsens

Despite these challenges, the CBN has kept the benchmark interest rate at 27.50%, a move that some analysts believe is not enough to stabilize the forex market. Governor Olayemi Cardoso has expressed optimism about a gradual decline in inflation, but concerns remain, especially regarding food prices and the cost of essential goods.

Predictions for the Naira in March

Financial analysts have presented different views on how the naira will perform in the coming month. Comercio Partners, an investment firm, predicts that the naira could fall to N1,700 per dollar in March, noting that recent improvements were only temporary due to Eurobond issuance. Meanwhile, the financial research platform LongForecast.com projects that the naira will start March at N1,494 per dollar and fluctuate between N1,424 and N1,535 before settling at N1,498 by the end of the month.

A more long-term outlook from Traders Union suggests that the naira may weaken further, reaching N1,622 per dollar by the end of 2025 and N2,094 per dollar by the end of 2029. These projections indicate that unless Nigeria implements effective economic policies, the naira may continue its downward trend.

How the Depreciation Affects Nigerians

For many Nigerians, the falling naira has become a major economic burden. Ebuka Jeremiah , a Lagos-based electronics trader, explained how currency depreciation has impacted her business. “The rising cost of importing goods has affected my profits. Every week, I have to adjust prices, and  customers are frustrated. It’s getting harder to stay in business,” he said.

Financial experts argue that a stable exchange rate is crucial for economic growth. Daniel Nathan, a financial analyst based in Lagos, pointed out that the country’s economic model is not sustainable. “The naira’s volatility is a reflection of deeper economic problems. Without addressing core issues like over-reliance on imports and inadequate local production, we won’t see lasting stability,” he explained.

The effects of the naira’s depreciation are not limited to businesses alone. Fatima Yusuf, a university student in the University of Lagos, highlighted how it affects students and young people. “Prices of books, transport, and even food keep going up. Though we are writing exams, things are beyond costly. I have to budget carefully, and many of my classmates are struggling as well. Government needs to intervene” she said.

Experts Weigh In on Possible Solutions

Some financial experts believe that Nigeria’s government should shift its focus toward long-term structural reforms rather than short-term stabilization measures. Samson Esemuede, Chief Investment Officer at Zrosk Investment Management Ltd, emphasized the need for consistency in monetary policy. “Stabilizing the exchange rate should be the priority for policymakers rather than frequent adjustments to interest rates. A stable naira will provide businesses with a predictable environment and boost investor confidence,” he noted.

Meanwhile, Bismarck Rewane, CEO of Financial Derivatives Company, stated that Nigeria has already spent billions in failed attempts to stabilize the currency. “The Federal Government has spent around $8 billion trying to keep the naira stable. But unless we address structural issues and diversify our economy, the problem will persist,” he said.

What Lies Ahead for the Naira?

As March approaches, the outlook for the naira remains uncertain. The currency’s performance will depend largely on government policies, global economic conditions, and market confidence. While some analysts believe the naira could experience brief stability, others warn that further depreciation is likely unless fundamental economic changes are made.

Addressing Nigeria’s reliance on imports, expanding local production, and implementing long-term forex policies could help stabilize the naira. However, without decisive action, the currency may continue to weaken, further impacting businesses and everyday Nigerians.