How the Naira exchange rate performed in Q3 2025

The Exchange Rate data released by the Central Bank of Nigeria (CBN) for the Nigerian Foreign Exchange Market (NFEM) reveals that the Naira exchange rate continued to strengthen in the third quarter of 2025, closing at ₦1,475.35 per USD on September 30, 2025. This closing rate marks a significant milestone as the local currency settled below the ₦1,500 threshold at the end of Q3 2025, signaling improved market confidence and a more stable foreign exchange environment.

According to the CBN data, the Naira’s performance in the quarter reflected an encouraging trend of appreciation both on a quarterly and yearly basis. On average, the currency appreciated by 3.94% quarter-on-quarter and 4.27% year-on-year, with an average exchange rate of ₦1,521.11 per USD in Q3 2025. This compares favorably with the ₦1,581.06 per USD recorded in Q2 2025 and the ₦1,586.09 per USD in Q3 2024, highlighting a steady and broad-based recovery in the value of the Naira over time.

Notable improvement in Nigeria’s foreign reserves

The stability witnessed during the third quarter was largely driven by a notable improvement in Nigeria’s foreign reserves, which have grown to their strongest position in years. The CBN reported that reserves climbed to $41 billion on August 19, 2025, and further increased to $42 billion by September 19, 2025, marking the highest level in over six years. This significant accumulation of reserves was attributed to improved oil export earnings, reduced speculative demand for foreign currency, and enhanced capital inflows following the government’s ongoing macroeconomic reforms.

Analysts suggest that maintaining this momentum could significantly strengthen Nigeria’s external position. A stable and appreciating Naira not only improves investor confidence but also enhances the country’s capacity to service foreign currency-denominated debts and meet liquidity demands in the forex market. With greater reserve buffers, the CBN is better positioned to defend the currency when necessary and to provide targeted interventions to smoothen volatility in the Nigerian Foreign Exchange Market.

However, the report also notes that sustaining currency stability requires a comprehensive and coordinated policy approach. The government and monetary authorities are encouraged to prioritize measures that increase external reserves, boost exports, and reduce excessive dependence on imports. Strengthening the productive base of the economy—particularly through investments in manufacturing, agriculture, and technology—will reduce import pressure and improve the country’s trade balance over time.

Promote oil and non-oil revenue growth

To further consolidate the gains achieved, policymakers should promote oil and non-oil revenue growth by supporting industries that can generate foreign exchange earnings. Encouraging export diversification, implementing tax incentives for local producers, and providing access to credit and infrastructure support are essential to driving competitiveness. Additionally, simplifying regulatory procedures and ensuring policy consistency will make it easier for both local and foreign investors to participate in the Nigerian economy.

If these policy measures are sustained, the Naira’s appreciation trend could continue into 2026, anchoring greater macroeconomic stability and investor confidence. The improvement in reserves, combined with disciplined fiscal management and strong export performance, provides a promising outlook for Nigeria’s foreign exchange dynamics and overall economic resilience. (Source: Central Bank of Nigeria – Nigerian Foreign Exchange Market Data)