The Nigerian Naira has recorded its third consecutive depreciation against the United States dollar at the official foreign exchange market, sparking renewed concerns over the country’s currency stability.
According to data published by the Central Bank of Nigeria (CBN) on Wednesday, August 20, 2025, the Naira exchanged at ₦1,536.73 per US dollar, weakening further from ₦1,534.93 recorded the previous day. This marks a ₦1.80 drop in just 24 hours.
This is the third straight day that the Naira has lost value against the dollar. The decline began on Monday, August 18, 2025, and has continued through the week despite a modest improvement in Nigeria’s external reserves.
The CBN reports that the country’s external reserves rose to \$41 billion on Tuesday, August 19, 2025, up slightly from \$40.96 billion recorded on Monday. The increase of about \$40 million is seen as a positive sign of capital inflows or improved crude oil receipts — key sources of Nigeria’s foreign earnings. However, it has not been enough to halt the downward pressure on the Naira.
While the CBN has not issued a direct statement on the recent depreciation, financial analysts believe the continued pressure on the Naira is due to a combination of high demand for dollars, ongoing speculation in the forex market, and slow supply of foreign exchange from both the government and private sectors.
Many importers and businesses continue to seek foreign currency to settle international obligations, while investors remain cautious due to uncertainty around Nigeria’s economic reforms and fiscal direction.
According to currency traders, the scarcity of dollars in the official market is pushing more demand into the black market, which further widens the gap between the official and parallel exchange rates.
“There is still a mismatch between dollar supply and demand,” one Lagos-based currency trader said. “Even with an increase in reserves, if dollars are not made available to the market, the Naira will keep falling.”
The weakening Naira has direct consequences for Nigerians, especially as the country continues to rely heavily on imported goods. The higher exchange rate means imported food items, fuel, medical supplies, and other basic necessities become more expensive.
It also affects school fees for students studying abroad and limits the ability of small businesses to import raw materials, leading to increased inflation and rising costs of living.
As of July 2025, Nigeria’s inflation rate stood at 27.5 percent, according to the National Bureau of Statistics. Many fear that further depreciation of the Naira will only worsen the situation for ordinary citizens already struggling with high food prices and transport costs.
Since mid-2023, the Central Bank of Nigeria has been working to reform the country’s foreign exchange system. One of the major moves was the unification of the multiple exchange rates and a shift towards a market-driven rate.
This reform initially caused the Naira to drop sharply, but the government hoped it would attract more foreign investment and improve transparency in the market. While some foreign funds have returned, the progress has been slow.
Earlier in 2025, the CBN also introduced tighter monetary policies, raising interest rates and intervening occasionally in the forex market to support the Naira. However, with persistent challenges in oil production, declining non-oil exports, and high external debt payments, Nigeria’s ability to defend the Naira remains limited.
The federal government has also promised to grow the economy through agriculture and local manufacturing, but progress remains slow due to insecurity, poor infrastructure, and inconsistent policies.
