The Nigerian naira showed a glimmer of resilience on Wednesday, January 22, 2025, as it recorded modest gains against the US dollar in both the official and parallel markets. This slight recovery, though small, has sparked cautious optimism among market watchers, even as the broader challenges plaguing the naira persist.
Data from the FMDQ Securities Exchange revealed that the naira appreciated marginally to close at N1,552.58 per dollar, marking a slight gain of N0.20 compared to the previous day’s rate of N1,550.78. While this indicates a minor stabilization in the official market, financial experts have warned against reading too much into this single-day improvement.
The naira’s performance in the parallel market, often referred to as the black market, was even more encouraging. It closed at N1,660 per dollar, reflecting a N10 gain from the previous day’s rate of N1,670. This development has provided much-needed relief for individuals and businesses that rely heavily on the parallel market for foreign exchange transactions.
Despite these gains, economic experts continue to sound a note of caution. Dr. Johnson Chukwu, CEO of Cowry Asset Management, noted that the appreciation is likely a temporary reprieve rather than a sign of sustained recovery. According to him, “The fundamental issues driving the naira’s weakness remain unchanged. Low foreign exchange inflows, coupled with high demand for imports, continue to weigh heavily on the currency. A sustainable recovery will require comprehensive policy measures to tackle these structural challenges.”
Similarly, Mr. Olusegun Oni, Chief Economist at Zenith Bank, highlighted the need for long-term strategies to stabilize the naira. “While today’s appreciation is a positive development, we must remain vigilant. Exchange rate volatility has been a persistent challenge for the Nigerian economy. To achieve stability, the government must implement policies that attract foreign investment, boost non-oil exports, and improve economic competitiveness. These measures are critical to addressing the root causes of the naira’s depreciation,” Oni said.
The slight improvement in the naira’s value has reignited discussions about the need for sustainable reforms in Nigeria’s foreign exchange management. Analysts emphasize the importance of creating a conducive environment for foreign direct investment, reducing the country’s dependence on imports, and diversifying export earnings beyond crude oil.
The naira’s volatility has long been a source of concern for businesses, households, and investors. Persistent challenges, including low foreign reserves, a shrinking oil revenue base, and rising inflation, have further complicated efforts to stabilize the currency. While the Central Bank of Nigeria (CBN) has implemented several measures aimed at managing the exchange rate, experts argue that more robust policies are needed to address the structural issues affecting the naira.
The government’s recent announcement of initiatives to boost non-oil exports and support local industries is a step in the right direction. However, these efforts will require time and consistent implementation to yield tangible results. In the short term, the naira’s performance will likely remain influenced by external factors, such as global oil prices and geopolitical developments, as well as domestic policies.
While Wednesday’s marginal gains offer a temporary respite, the path to achieving long-term currency stability remains steep. Experts urge the government to take decisive action in addressing the underlying issues affecting the naira to safeguard the economy from further shocks.
Stay informed on the latest economic developments and other breaking news by visiting Trending Naija News—your go-to source for credible, reliable, and engaging updates from Nigeria and beyond. Sign up now to receive timely news alerts, expert analysis, and in-depth reports directly in your inbox!