The naira depreciated further in March 2025, dropping by 2.4% and 2.6% at the Nigerian Autonomous Foreign Exchange Market (NAFEM) and the parallel market, respectively, amid persistent demand pressure.
According to Afrinvest’s latest Monthly Market Report, the naira closed the month at ₦1,536.82/$ at NAFEM and ₦1,530/$ at the parallel market, a clear indication of ongoing volatility in Nigeria’s foreign exchange market.
AIICO Capital, in its own March macroeconomic update, confirmed the currency’s significant loss in value despite the Central Bank of Nigeria (CBN) injecting $668.8 million to stabilise the market. “Despite interventions, the naira weakened by 2.97% month-on-month, down from ₦1,492.49/$ to ₦1,536.82/$,” AIICO reported.
The report highlighted robust demand from foreign portfolio investors and local corporates, which outstripped available supply. The parallel market mirrored this trend, losing ₦43.50/$ to close at ₦1,536/$.
Although liquidity briefly improved mid-month with CBN support, the naira remained under pressure through the end of March. On a quarterly basis, the naira declined by 7 basis points at NAFEM, while external reserves dropped by $110 million to $38.31 billion.
Looking ahead, AIICO projected continued liquidity injections by the CBN, though global economic risks—including fresh U.S. tariffs under President Donald Trump—could increase capital flight and market volatility.
Backing this, the CBN’s Financial Markets Department Director, Omolara Duke, confirmed that the apex bank intervened again between April 3 and 4 with a $197.71 million injection into the FX market to ensure stability. The dollars were sold at rates between ₦1,519 and ₦1,595.20/$.
Despite this, market pressure intensified by midweek as rising offshore demand and weaker oil prices—following an OPEC+ output hike—drove the naira to ₦1,570/$ before closing the week at ₦1,567.02/$. Foreign reserves declined further by $149 million to $38.15 billion.
Analysts at Afrinvest warned that the end of the naira-for-crude swap initiative could further worsen the FX crisis, as refineries and PMS importers rejoin the dollar-seeking queue. “We expect the naira to remain pressured near-term,” the report stated.
CardinalStone also noted that the FX market has been negatively impacted by capital flight and higher local dollar demand, recording a 1-month return of -8.6% and a year-to-date return of -5.8%.
Former Zenith Bank chief economist, Marcel Okeke, cautioned that the Trump-led global tariff war could spark a wave of imported inflation in Nigeria. “We’re likely to see an uptick in imported inflation, especially given our high import dependence,” Okeke said.
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