The Nigerian naira recorded a slight depreciation against the United States dollar at the official foreign exchange market on Tuesday, just days before the end of the year. The development reflects continued pressure on the local currency, even as Nigeria’s external reserves continue to grow.
Data released by the Central Bank of Nigeria (CBN) showed that the naira weakened to N1,445.68 per dollar on Tuesday, compared to N1,442.51 recorded on Monday. This represents a day-to-day loss of N3.17 against the dollar at the official market.
The latest drop highlights the unstable nature of Nigeria’s foreign exchange market, which has experienced frequent changes in recent months due to demand pressures, global economic factors, and local policy adjustments.
According to available records, the last time the naira depreciated against the dollar at the official market before this week was on December 18, when it closed at N1,457.84 per dollar. Since then, the currency had shown some level of improvement before slipping again.
While the naira weakened at the official market, the situation was different at the parallel, or black market. On Tuesday, the naira exchanged at N1,475 per dollar, the same rate recorded on Monday.
This stability at the black market suggests a temporary balance between demand and supply of foreign currency among street traders and informal dealers. However, the gap between the official and parallel market rates remains a concern for businesses and investors.
The depreciation of the naira comes despite a continued rise in Nigeria’s external reserves. According to the CBN, the country’s external reserves rose to $45.45 billion as of December 29, 2025.
External reserves represent foreign currency assets held by the central bank and are used to support the local currency, settle international payments, and boost investor confidence. In theory, rising reserves should help stabilise the naira.
However, analysts say that reserves alone are not enough to guarantee currency stability. Factors such as foreign exchange demand, inflation, investor confidence, oil earnings, and government policies also play major roles.
The mixed performance of the naira shows that while Nigeria is building its reserves, pressure on the currency remains due to high demand for dollars.
Nigeria’s economy depends heavily on imports for goods such as fuel, machinery, food items, and raw materials. This creates strong demand for foreign currency, especially the US dollar.
During festive periods and towards the end of the year, demand for dollars often increases as businesses settle outstanding payments and individuals travel or make foreign purchases. This seasonal demand may have contributed to the naira’s latest drop.
Inflation is another major factor. Rising prices reduce the value of the naira and increase the cost of imports. Nigeria has continued to battle high inflation, which affects household income and business operations.
In addition, global economic conditions, including interest rate policies in the United States and other major economies, influence capital flows into emerging markets like Nigeria.
Over the past year, the Central Bank of Nigeria has introduced several reforms aimed at improving transparency and stability in the foreign exchange market. One major step was the move towards a more market-driven exchange rate system.
The CBN has also worked to clear foreign exchange backlogs and attract foreign investment by improving confidence in the Nigerian economy.
Despite these efforts, challenges remain. Experts say it will take time for the full impact of these reforms to be felt, especially given the structural issues facing the economy.
The central bank has repeatedly assured Nigerians that it remains committed to stabilising the naira and ensuring adequate foreign exchange supply.
The depreciation of the naira has direct and indirect effects on businesses and ordinary Nigerians. For importers, a weaker naira means higher costs for goods brought into the country. These costs are often passed on to consumers in the form of higher prices.
Manufacturers who rely on imported raw materials also face increased production costs, which can affect output and employment.
For households, a weaker currency reduces purchasing power and makes foreign goods, education, and medical services more expensive.
Some Nigerians have expressed concern that continued pressure on the naira could worsen the cost of living, especially as the new year approaches.
A Lagos-based currency dealer said the market is still adjusting to recent policy changes. “The demand for dollars is still high, especially at this time of the year. Until supply improves significantly, we may continue to see pressure on the naira,” he said.
As Nigeria enters the new year, attention will remain focused on the performance of the naira and the overall health of the economy. Many businesses are hoping for greater stability in the foreign exchange market to allow for better planning and investment.
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