By Grace Alegba
Lagos, Dec. 19, 2025 – The Nigerian naira closed the trading week on a softer note, depreciating by 0.4% at the official Nigerian Foreign Exchange Market (NAFEM) to settle at N1,464.49 per US dollar on Friday. This decline, detailed in data from the Central Bank of Nigeria (CBN), underscores the persistent volatility and underlying demand pressures that continue to challenge the currency’s stability, despite intermittent gains.
The closing rate represents a step back from Thursday’s finish of N1,457.84 and caps a week of fluctuating fortunes for the local currency. This movement is more than a mere statistical blip; it reflects the ongoing tug-of-war between monetary policy efforts and market fundamentals, including import demand, speculative activity, and the pace of foreign capital inflows.
From Gains to Losses: A Weekly Rollercoaster
The week had begun on a promising trajectory. On Monday, the naira appreciated by N2.59, opening at a stronger position of N1,451.81—a positive signal that often sparks optimism. However, this strength proved fleeting. By Tuesday, the currency had already begun to cede ground, trading at N1,455.08. The downward drift continued into Wednesday (N1,455.49) before culminating in Friday’s more pronounced close at N1,464.49.
This pattern highlights a critical and recurring theme in Nigeria’s forex market: the difficulty of sustaining appreciation momentum. Analysts point to several factors that erode initial gains. Sustained demand pressure from manufacturers and businesses for raw materials and equipment, dollar obligations by oil companies, and portfolio investors seeking to repatriate funds often create a consistent underlying demand for dollars that outpaces supply, especially when monthly allocations from the CBN are absorbed.
Context and Implications: What Does This Mean?
A 0.4% weekly depreciation, while seemingly modest, contributes to a broader trend that affects inflation, business planning, and the cost of living. For the average Nigerian, a weaker naira at the official market can translate to higher costs for imported goods like fuel, electronics, and certain food items, as these costs eventually filter through the economy. For businesses, it introduces uncertainty in budgeting and long-term contracts priced in dollars.
The official market rate also sets a benchmark. Divergence between this rate and the parallel market rate can indicate pent-up demand or market distortions. Therefore, the CBN’s focus remains on achieving true price discovery and stability across all windows, a complex task involving managing reserves, adjusting interest rates, and implementing other monetary policy tools.
In essence, Friday’s closing figure is not an isolated event but a data point in the ongoing narrative of Nigeria’s economic recalibration. It serves as a reminder that currency stability requires not just periodic interventions but sustained improvements in domestic productivity, export diversification, and foreign investment inflows to fundamentally bolster the naira’s value.
(Report by Grace Alegba for NAN; Edited by Kamal Tayo Oropo)
Source: www.nannews.ng
