The naira witnessed a renewed wave of depreciation, sliding by 2.4 per cent at the Nigerian Autonomous Foreign Exchange Market window and 2.6 per cent in the parallel market in March 2025, compared to February’s close, according to the latest Afrinvest Monthly Market Report titled ‘Analysing Global and Nigerian Economies & Financial Markets’.
At the end of the month, the local currency settled at N1,536.82/$ at NAFEM and N1,530.00/$ in the parallel market, underscoring persistent demand pressures despite sustained interventions by the Central Bank of Nigeria.
In its March edition of the macroeconomic report, AIICO Capital corroborated the development, attributing the naira’s performance to unrelenting market demand, particularly from foreign portfolio investors and corporate entities.
“The naira experienced significant depreciation in March 2025 due to persistent demand pressure in the (Nigerian) foreign exchange market. Despite the Central Bank of Nigeria intervening with substantial dollar sales totalling $668.8m, the naira weakened by 2.97 per cent m/m, closing at N1,536.82/$ from N1,492.49/$ at the start of the month,” stated AIICO Capital.
Reflecting a similar trend, the parallel market declined by about N43.50/$ to N1,536.00/$, despite mid-month improvements in liquidity stemming from the CBN’s intervention. Still, demand far outpaced available supply.
“In the final week, despite continued CBN dollar sales and a slight appreciation of 0.5 0.5 bps, the naira remained under pressure. On a quarterly basis, the naira depreciated by 7 bps q/q at the NFEM window. Meanwhile, external reserves fell by c.$110m to $38.31bn,” AIICO Capital further stated.
Looking ahead, the firm forecasted that while the CBN might sustain its liquidity efforts to steady the naira, emerging global headwinds, such as retaliatory tariffs linked to new U.S. trade policies, could heighten capital flight and volatility.
“However, global risks, like US tariffs and retaliatory measures, may spur volatility and capital flight,” the report stated.
The CBN has already acknowledged the naira’s vulnerability to these global developments.
In a statement signed by the Director of the Financial Markets Department, Omolara Duke, the apex bank linked recent market shifts to U.S. President Donald Trump’s newly imposed tariffs, which disrupted sentiment between April 3 and 4.
“In line with its commitment to ensuring adequate liquidity and supporting orderly market functioning, the CBN facilitated market activity on Friday, April 4, 2025, with the provision of $197.71m through sales to authorised dealers.
This measured step aligns with the Bank’s broader objective of fostering a stable, transparent, and efficient foreign exchange market.
“The CBN continues to monitor global and domestic market conditions and remains confident in the resilience of Nigeria’s foreign exchange framework, which is designed to adjust appropriately to evolving fundamentals.
All authorised dealers are reminded to adhere strictly to the principles outlined in the Nigeria FX Market Code and to uphold the highest standards in their dealings with clients and market counterparties,” Duke said.
Throughout the first week of April, the naira fluctuated wildly. It initially traded within the N1,525, N1,535/$ range, supported by CBN efforts and moderate offshore inflows.
However, by midweek, FX demand soared following a drop in oil prices—triggered by OPEC+’s production hike—and broader global risk-off sentiments catalyzed by Trump’s tariff moves. These pressures pushed the naira to a peak of N1,570/$.
Despite further CBN interventions, the currency closed the week at N1,567.02/$, marking a weekly loss of 1.97 per cent. Concurrently, foreign reserves slipped by $149m, landing at $38.15bn.
Analysts at Afrinvest warned of more turbulence ahead, particularly with the halt of the naira-for-crude initiative.
They predict that foreign exchange demand may escalate as local refineries and PMS importers seek hard currency to maintain operations.
“Against this backdrop, we expect the naira to remain pressured near-term, barring any unforeseen shocks,” they noted.
Meanwhile, CardinalStone, in its macroeconomic report, highlighted offshore investor flight to safety as a key reason behind the intensified dollar demand that’s weighing on the naira’s value.
The FX market saw a 1-month return of -8.6 per cent and a Year-to-Date loss of -5.8 per cent.
“Some of the concerns relate to the risk of the government not meeting its revenue target and the higher deficit that could imply. Speaking to this risk, crude production declined to c. 1.67 mbpd in February (vs. 1.74 1.74mbpd in January) amidst the material contraction in oil price (down by 14.2% YtD),” CardinalStone said.
Commenting on the broader implications of Trump’s tariff war, Marcel Okeke, former chief economist at Zenith Bank, cautioned that global inflation could worsen.
“We’re likely to see an uptick in imported inflation,” he said, warning that Nigeria remains highly susceptible due to its heavy reliance on imports.
