The Nigerian naira kicked off the first week of June 2025 on a strong note, appreciating significantly in the parallel market. The currency closed at ₦1,610 per US dollar on Monday, a ₦20 gain from Friday’s closing rate of ₦1,630/$1, according to reports from Nairametrics and market sources in Lagos.
This positive move comes as a relief following a turbulent May, where the naira depreciated by 1.24% in the parallel market, touching its monthly low of ₦1,635/$1 on May 15. However, from May 21 to May 29, the naira traded within a narrow band of ₦1,618 to ₦1,625/$1, signaling a period of relative calm and market correction.
Stability Returns to Official Window
In the Investors and Exporters (I&E) window, Nigeria’s official foreign exchange market, the naira demonstrated resilience throughout the final week of May. Between May 23 and May 30, the naira traded steadily between ₦1,579/$1 and ₦1,592/$1, compared to earlier in the month when rates reached as high as ₦1,612/$1.
The Central Bank of Nigeria (CBN) reported that the naira appreciated by 1.28% over the course of May in the official window, highlighting the impact of ongoing monetary policy tightening, increased FX inflows, and improved market transparency.
FX Gains Beyond the Dollar
The naira’s bullish momentum extended to other foreign currencies. Against the British Pound Sterling, the naira appreciated to ₦2,175/£1 on Monday, strengthening from Friday’s close of ₦2,190/£1. This broad-based gain reflects renewed market confidence, partly driven by the CBN’s sustained interventions, as well as increased remittance inflows and oil-related FX earnings.
Market Dynamics Behind the Strengthening
Several factors may be contributing to the naira’s rebound:
• Improved dollar liquidity from oil revenues and remittances.
• CBN’s coordinated FX market reforms since early 2024, which include unified exchange rates and curbs on round-tripping.
• A possible reduction in speculative demand as investors anticipate relative rate stability following the MPC’s decision to hold the benchmark interest rate at 27.5%.
While this appreciation is encouraging, sustained recovery will depend on Nigeria’s ability to deepen its FX reserves, attract capital inflows, and boost non-oil exports.
As markets continue to monitor these shifts, the performance of the naira in both official and parallel markets will remain a key economic barometer.
