The naira experienced a significant depreciation on Monday, dropping by 2.31 percent or N38.12 at the National Autonomous Foreign Exchange Market.
This decline saw the currency close at N1,690.37 per dollar, compared to the previous week’s closing rate of N1,652.25 per dollar.
Data from FMDQ on Monday revealed a daily turnover of $173.14 million, marking a sharp 42 percent drop from Friday’s $296.63 million.
However, in the parallel market, the naira showed slight strength, closing at N1,735 to the dollar, an improvement from the N1,740 recorded in the preceding trading session.
By the end of last week, the naira had appreciated by 159 basis points compared to the prior week, closing at N1,652.25 per dollar.
Despite the recent decline, trading activity at NAFEM surged last week, with average turnover increasing by an impressive 154.6 percent week-on-week, reaching $527.5 million.
Meanwhile, the Central Bank of Nigeria’s foreign reserves recorded a modest increase of 0.5 percent week-on-week, rising to $40.2 billion as of November 13. This is the highest level since January 2022.
The naira’s trajectory remains a subject of speculation. According to Veriv Africa, a data insights firm, Nigeria’s exchange rate is expected to stay highly volatile in 2025.
In its Nigeria Macroeconomic Outlook 2025 report, the firm cautioned that the inability to meet the crude oil production quota of 1.5 million barrels per day set by the Organisation of the Petroleum Exporting Countries has disrupted the nation’s trade balance, further weakening the currency.
The report predicts that speculative activities will continue to influence exchange rate dynamics next year. “A high inflationary environment will continue to feed into the dampening of non-oil exports, which could exacerbate the depreciation of the naira.
Poor aggregate supply and limited export potentials have limited external reserves and foreign exchange inflow,” Veriv Africa stated.
In the short term, the firm does not foresee significant appreciation of the naira.
“Without significant improvement in the abovementioned conditions, the lacklustre performance recorded this year will likely be repeated in 2025,” the report added.
The report criticized the Central Bank of Nigeria’s hawkish monetary stance this year, noting it has failed to significantly curb inflation. Veriv Africa attributed this failure to structural supply-side challenges.
“This has largely been a result of the supply-side fundamentals that have influenced inflation in Nigeria. Therefore, the CBN needs to reassess its approach to raising the MPR. Instead, collaborative, supply-side strategies that promote productivity should be prioritized. This approach avoids the trade-off between inflation and economic growth, aiming to control inflation sustainably while fostering growth and reducing unemployment,” the report recommended.
It also urged both federal and state governments to foster productivity in the non-oil sectors of the economy.
Beyond offering financial support, Veriv Africa emphasized the importance of other services and infrastructure.
“Beyond the provision of financing, other complementary services must be provided, including a robust quality assurance and testing infrastructure for metals and agricultural commodities, increased investment in affordable energy for manufacturing companies, improvement in transport & storage infrastructure, and well-designed and deployed export promotion activities in key target markets.”
Furthermore, state governments were encouraged to identify sectors where they hold competitive advantages and implement targeted policies to maximize those strengths.
