CBN Adjusts Exchange Rate as Naira Trades at New Low amid Dollar Crash
- The Nigerian currency, the naira, depreciated by 0.6% on Monday, January 27, 2025, in the official foreign exchange window
- The naira traded at N1,533 per dollar, down from N1,531 it traded on Friday, January 24, 2025, as the dollar declines
- However, analysts believe the naira is stable relative to previous weeks’ performances in the foreign exchange market
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.
The Nigerian naira traded slightly negatively on Monday, January 27, 2025, after a massive rally on Friday, January 24, 2025.
The naira, which rose below the N1,5400 per dollar ceiling, on Friday fell marginally on Monday, trading at N1,1533.63, down from the N1,531.50 it traded on Friday, January 24, 2024.
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The naira maintains relative stability
With the current rate, the naira maintains relative stability in the FX market compared to the previous weeks as volatility thawed amid the decline in FX reserves.
Experts expect the naira to rally more in the coming days as the dollar declines.
At the end of trading on Monday, January 26, 2025, currency dealers quoted the dollar at a high of N1,537 and a low of N1,529 per dollar.
Gap between official, parallel markets widens
However, the naira gained in the parallel segment of the forex market, rising to N1,650 per dollar as the dollar experienced its highest weekly loss.
The naira’s gain represents a 0.6% gain or N10 from the N1,660 per dollar it traded on the streets on Friday, January 24, 2025.
With the current rate, the gap between the official and parallel markets widened by N127.
Janet Ogochukwu, senior banker and economist, expressed optimism at the current naira rate, saying investors' confidence is gradually returning to the FX market.
“As I said the last time, businesses and individuals can plan with the current rate of the naira as it seems to have found its bearing. Kudos to monetary policy drivers, the Central Bank of Nigeria (CBN). The naira is maintaining stability despite the decline in Forex reserves. This is commendable.”
However, the CBN has a lot of work to do to close the yawning gap in the FX windows because it may return volatility,” she said.
Dollar declines as experts predict impact on naira
The dollar declined on Friday, leading to its biggest weekly loss in over a year after Donald Trump hinted at easing tariffs on Chinese goods.
On Friday, the US greenback dropped 0.8% against major currencies but closed its losses to a 65% decline.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), stressed ways the Trump administration could affect the Nigerian currency.
He said Trump’s policies could potentially boost the dollar, indicating increased US investment and an employment increase.
He noted that there have already been signs of this in the stock market, as investor confidence has risen, impacting the dollar’s strength.
Nigerian banks begin sale of dollars
Legit.ng earlier reported that some commercial banks resumed selling their customers Personal Travel Allowance (PTA) and Business Travel Allowance (BTA), showing a shift in FX availability after a prolonged supply shortage.
Read also
Naira makes strong gains in official market as CBN predicts high dollar inflow into Nigeria
The development came as financial institutions adjusted to market demands and the Central Bank of Nigeria (CBN) policy changes.
Nigeria’s oldest financial Institution, First Bank, announced the resumption of FX sales for various international transactions.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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