Naira Begins New Week on Positive Note After Hitting Lowest at Beginning of May

• The Nigerian currency has appreciated slightly against the dollar in the official foreign exchange market
• The naira, which hit its lowest at the beginning of May, closed trading at N1,605 per dollar on Monday, May 5, 2025, from N1,606
• The development comes amid renewed volatility in the Nigerian FX markets, leading to the naira’s depreciation above N1,600 per dollar

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The Nigerian currency, the naira, rebounded slightly against the dollar after experiencing the worst start in May 2025.

The local currency faced renewed volatility as crude oil prices plunged amid President Donald Trump’s sweeping global tariffs.

Crude oil price affects the naira’s performance

Experts have predicted the worst month for the naira as OPEC+ members move to increase output.

They say oil prices severely affect the Nigerian currency as the Central Bank of Nigeria (CBN) has to defend it from the foreign exchange reserves.

However, at the end of trading on Monday, May 5, 2025, the naira traded at N1,605 to the dollar, slightly up from the N1,606 it closed on Friday, May 2, 2025.

Data from the Nigerian Foreign Exchange Market (NFEM) shows that dealers quoted the dollar at a high of N1,611 and a low of N1,601.98 per dollar.

CBN records N13.9 trillion loss

Meanwhile, CBN recorded a N13.9 trillion loss, about $9 billion, as it tried to settle overdue contracts and prune FX liabilities on its balance sheet and save the naira in 2024.

The loss more than doubled from N6.3 trillion in 2023 as the apex bank redeemed legacy transactions to reduce outstanding forex liabilities, lowering FX exposure and boosting reserves.

CBN records a loss trying to defend the naira

In 2023, the bank published its finances to boost investor confidence and enhance transparency in its affairs and foreign exchange management.

According to reports, the development came as the bank aimed to remove capital controls, enable the naira to trade freely and lure inflows to end dollar scarcity.

The bank’s financial reports reportedly raised concerns about the actual size of Nigeria’s external reserves and the apex bank’s capacity to support the naira, as it disclosed large deals with JP Morgan and Goldman Sachs involving foreign currency contracts for cash to support the government’s revenue.

CBN settles debts to foreign banks

Bloomberg reported that the CBN said in April that it has settled deals, including swaps and forward contracts, to bring Nigeria’s net foreign currency to $23 billion as of December last year.

As of April 30, 2025, Nigeria’s gross external reserves increased to $37.9 billion, the highest in three weeks.

The Nigerian currency, the naira, has lost about 71% of its value against the dollar since Bola Tinubu became president and embarked on foreign currency reforms.

Reports say liquidity management costs from the sale of high-yielding short-tenured fixed income securities meant to mop up excess naira, control inflation, and the exchange rate, increased to N4.5 trillion in 2024 from N1.5 trillion in 2023.

CBN said it is committed to external sector stability to ensure Nigeria is better positioned to meet its international obligations, stabilise the naira, and boost macroeconomic confidence.

CBN adjusts Customs exchange rates to clear goods

Legit.ng earlier reported that the CBN adjusted the Customs exchange rate for cargo clearance at Nigeria’s ports following the naira’s depreciation against the dollar.

The apex bank is responsible for fixing the exchange rates at which importers clear goods from Nigeria’s air and seaports.

According to data from the Customs trade portal, the exchange rate to clear goods was set at N1,601.681 to the dollar by the CBN.

Source: Legit.ng