Naira Appreciated Marginally by 0. 48% in May 2025

Data from the Central Bank of Nigeria (CBN) indicated that the Naira experienced a slight recovery in May 2025, with the average exchange rate recorded at ₦1,595.098/$, a decrease from ₦1,604.70/$ in April 2025.

This represents a month-on-month appreciation of 0.48%, suggesting minor improvements in foreign exchange liquidity and a reduction in pressure on the naira. The strengthening of the currency can be attributed to cautious interventions by the Central Bank.

However, when viewed on a year-on-year basis, the naira has depreciated considerably. The closing rate for May 2024 was ₦1,482.98/$, which indicates a weakening of 7.39% over the 12-month period.

This situation reflects structural weaknesses within the FX market, such as high import demand, limited non-oil exports, and declining capital inflows. During the review period, the naira traded within a narrow range, with the lowest rate recorded at ₦1,579/$ on May 23, 2025, and the highest rate in April at ₦1,644/$ on April 9, 2025, demonstrating relative stability in May compared to the increased volatility observed in April.

Notably, the naira appreciated for three consecutive days from May 19 to May 21, 2025, indicating a rise in market confidence. Despite this temporary relief, exchange rate volatility continues to significantly affect consumers and businesses through the ongoing increase in the prices of goods, services, and input costs.

Therefore, to achieve long-term currency stability, policymakers must prioritize rebuilding external reserves and boosting non-oil exports by fortifying the manufacturing sector. Source: CSEA Africa