By Grace Alegba
Lagos, Dec. 12, 2025
The Nigerian Naira concluded a volatile trading week on a positive note, appreciating by N1.65 to close at N1,454.41 against the U.S. dollar at the official market on Friday. While the gain of 0.11% from Thursday’s rate of N1,456.06 may appear marginal, it represents a significant psychological threshold for market watchers and signals a momentary pause in the currency’s long-term pressures. This movement, reported on the Central Bank of Nigeria’s (CBN) official platform, underscores the delicate equilibrium the monetary authority is attempting to maintain.
To fully appreciate this single-day gain, one must view it within the broader context of the week’s trading pattern. The Naira opened the week with slight depreciation, trading at N1,451.86 on Monday. It then experienced minimal, yet consistent, fluctuations—closing at N1,454.38 on Tuesday, N1,455.38 on Wednesday, and N1,456.06 on Thursday—before its Friday rebound. This weeklong activity highlights the characteristic “yo-yo” effect in the official window, often driven by controlled interventions, periodic foreign exchange allocations, and shifts in demand from authorized dealers.
The critical question for investors and businesses is what drives such movements. A gain at the official market can stem from several factors: a deliberate injection of dollars by the CBN to boost liquidity, a temporary reduction in demand from major importers, or positive sentiment from recent policy announcements. However, the true test of the Naira’s strength lies in the convergence between this official rate and the parallel market rate, which often tells a more candid story about dollar scarcity and inflationary expectations. Analysts caution that without corresponding improvements in Nigeria’s core economic fundamentals—such as increased crude oil production, foreign direct investment inflows, and a reduction in the dollar demand for refined petroleum imports—short-term appreciations may prove unsustainable.
For the average Nigerian, daily exchange rate movements translate directly to the cost of imported goods, from medicine to electronics, and influence inflation figures. Therefore, even a modest gain can offer a brief respite, though long-term stability requires more profound structural reforms. As the week closes, market participants will be watching closely to see if this gain marks the beginning of a stabilizing trend or is merely a temporary correction in the Naira’s complex and challenging journey.
Edited by Kadiri Abdulrahman
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