By Grace Alegba
Lagos, Dec. 22, 2025 (NAN) – The Nigerian Naira opened the trading week on a stronger footing, appreciating significantly against the US Dollar at the official market. Data from the FMDQ Securities Exchange, which oversees the Nigerian Autonomous Foreign Exchange Market (NAFEM), shows the Naira closed at N1,456.56 per dollar on Monday, a notable gain from the previous session.
This represents an appreciation of N7.93, or approximately 0.54%, from Friday’s closing rate of N1,464.49. While the gain may appear modest in percentage terms, it marks a crucial reversal for the local currency, which had faced sustained depreciation pressure in the preceding week. This movement is a key indicator watched by investors, businesses, and policymakers for signals of currency stability.
Beyond the Headline: Understanding the ‘Official Market’
The report specifically references the “official market,” a critical distinction for understanding Nigeria’s complex forex landscape. The official NAFEM window is where the Central Bank of Nigeria (CBN) and authorized banks trade foreign exchange, typically for eligible transactions like imports of essential goods, government obligations, and foreign investor repatriations. Its rate is often more favorable than the parallel market rate, creating a spread that reflects market sentiment and liquidity constraints.
What Drives a Daily Gain?
A single-day appreciation can be influenced by several interconnected factors:
- Increased Dollar Supply: The CBN may have intervened by injecting fresh US dollar liquidity into the market, perhaps from recent crude oil sales or external borrowings.
- Reduced Demand Pressure: There could have been a temporary lull in demand from key sectors like manufacturing and energy, or a slowdown in speculative dollar holdings.
- Positive Market Sentiment: Announcements of new foreign investment inflows, positive economic data, or credible policy signals from monetary authorities can bolster confidence in the Naira.
- Technical Market Adjustments: Daily fluctuations are normal and can result from the balance of buy and sell orders at the end of a trading session.
It is essential to view this gain within a broader context. A one-day improvement, while positive, does not necessarily indicate a long-term trend. The Naira’s stability hinges on structural factors such as sustained increases in domestic production (to reduce import dependency), higher non-oil export earnings, and consistent foreign portfolio and direct investments. Analysts will be watching to see if the CBN can maintain this momentum through consistent and transparent market policies.
For the average Nigerian and the business community, a stronger Naira at the official market can translate to lower costs for imported raw materials and finished goods, potentially easing inflationary pressures in the medium term. However, the ultimate impact on consumer prices and economic growth depends on the persistence of the appreciation and its convergence with rates in the parallel market.
In summary, Monday’s gain of N7.93 is a welcome development for the Naira, breaking a depreciatory trend. It underscores the dynamic nature of the foreign exchange market and highlights the ongoing efforts to achieve price discovery and stability. Stakeholders will monitor subsequent trading sessions closely to determine if this marks the beginning of a sustained recovery or a temporary market correction.
GA/AWA
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Edited by Olawunmi Ashafa
