Naira Ends Losing Streak in Official Market, Recovers 0.17 Per Cent
- The Nigerian currency, the naira, has recorded its first gain following a week of losses after the Christmas holiday
- The local currency gained 0.17% against the US dollar, trading at N1,545.75 on Thursday, January 16, 2025, as against the N1,550 of the day before
- The development comes amid a decline in Nigeria’s external reserves in the last 11 days, from $40.88 billion to $40.56 billion
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The naira ended its week-long losses against the US dollar on Thursday, January 16, 2025, gaining 0.17%.
The Nigerian currency has been plagued by under-performance in the forex market, losing against the dollar for almost half the second week of January.
Source: Getty Images
Naira continues to trade above N1,500 per dollar
The marginal losses saw the naira hover just above the N1,500 threshold, with analysts suggesting it may have stabilised following the devaluation.
The naira opened trading in the FX market on Thursday, January 16, 2025, negatively at N1,550.75 per dollar, representing 0.11%.
It, however, closed trading with a marginal gain of 0.17%, trading at N1,548.47 per dollar.
Currency traders in the official market quoted the dollar at a high of N1,557.50 and a low of N1,450.50, resulting in a margin of N10.
Experts have said the prolonged loss of the local currency was due to inadequate forex supply, leading to high demand.
According to them, the naira will depreciate until the Central Bank of Nigeria (CBN) intervenes by selling FX to market traders.
“There is a lot of pressure on the naira from IJGBs seeking to return after the Christmas holidays. The banks and forex dealers are swarmed with demands for FX. This is pressuring the naira,” Janet Ogochukwu, economist and senior banker, told Legit.ng.
External reserves decline
Meanwhile, Nigeria’s external reserves, which grew in the past year, have declined sharply due to external debt servicing.
Data from the Central Bank of Nigeria (CBN) showed that Nigeria’s external reserves fell by $320 million, a 0.8 decline in two weeks.
As of January 13, 2025, the reserves stood at about $40.56 billion, relative to $40.88 billion on January 2, 2025.
Analysts blamed the decline on two key factors: international payments like debt servicing and the CBN's FX interventions.
Analysts identify the reason for the reserve's decline
Nigeria’s external debt servicing expenditures stood at $3.6 billion in the first nine months of 2024, a 39.8% increase of $1.02 billion over the $2.6 billion spent in 2023.
The decline showed the ongoing hassles posed by Nigeria’s external debt servicing obligations and the desire to stabilise the exchange rate market.
Another reason for the depletion of the reserves was the apex bank’s intervention in the FX market, which aimed to stabilise the local currency by supplying dollars to meet market demands.
How naira compare to other currencies against US dollars
Legit.ng earlier reported that the Nigerian currency remained relatively strong despite the dollar's surge to a two-year high against major currencies on Monday, January 13, 2025.
The naira remained stable against the US greenback compared to other currencies.
The naira flatly ended the first week of trading in 2025 as pressure eased on the FX market.
Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.
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Source: Legit.ng
