The Nigerian Naira strengthens against the Dollar following CBN reforms, trading at N1,492.49. Experts urge caution, highlighting the need for increased production to sustain the gains. Despite improvements, foreign exchange reserves decline, and analysts suggest that long-term stability depends on boosting domestic economic activity.
The Nigerian Naira has experienced a positive shift in the official market, trading at N1,492.49 to the US Dollar on Friday, February 28, 2025. This marks a N6.57 gain or a 0.44% increase from the previous day’s rate of N1,499.07, continuing a trend of gradual appreciation since the Central Bank of Nigeria (CBN) introduced reforms aimed at improving transparency and efficiency in the foreign exchange market.
Since December 2024, these reforms have created a more stable environment for the Naira, with many financial analysts noting the gradual improvements in the currency’s value. The increased stability has been welcomed by local businesses and investors, suggesting a potential shift in Nigeria’s economic dynamics.
However, despite these positive developments, experts urge caution. Professor Jonathan Aremu, a former CBN director and an academic at Covenant University, emphasized that while the Naira’s appreciation is a promising sign, it may be too early to assume permanent stability. He explained that the Naira has previously fluctuated, even after gains, and urged the government to focus on boosting local production to sustain the currency's strength.
“Economic stability cannot solely rely on monetary policy,” Aremu stated in an interview. “For the Naira’s gains to be long-lasting, we need increased production to support a stronger economy and reduce reliance on imports.”
Aremu highlighted that the increase in domestic production would not only help stabilize the Naira but would also lower the demand for foreign currency, ultimately leading to a stronger local currency. While efforts to limit money supply are essential, Aremu stressed that they must be complemented by other measures that enhance economic activity.
Despite concerns about production, Cordros Securities in their latest economic update noted that the Naira’s appreciation has also been aided by a reduced demand for foreign exchange, despite declining FX reserves. The report indicated that the country’s reserves had fallen by $241.5 million to $38.46 billion as of February 27, showing a steady decline over several weeks.
"Even with the ongoing decline in reserves, the market remains relatively stable due to improved liquidity and investor confidence,” the report noted. "We expect the CBN to continue its interventions to support the Naira during times of volatility."
