The naira steadied at N1,750/$ in the parallel market after the Central Bank of Nigeria's 25-basis point rate hike. Despite minimal movement in the forex market, experts predict the naira could appreciate in 2025 due to improving foreign reserves and oil production.
The naira remained largely unchanged in both the official and parallel foreign exchange (FX) markets after the Central Bank of Nigeria (CBN) raised the monetary policy rate (MPR) by 25 basis points to 27.50%. On Wednesday, the naira closed at N1,660.83/$ at the official market, reflecting a slight depreciation of 0.08%. It steadied at N1,750/$ in the parallel market. Despite the interest rate hike, the naira showed minimal movement due to reduced demand and liquidity in the FX market, with daily turnover declining by 20.9% to $337.07 million.
On Tuesday, after the rate increase, the naira had gained 0.98% compared to Monday’s rate. However, year-to-date, the naira has depreciated by 40.4%, from N988.46/$ at the beginning of the year. Experts, including economist Bismarck Rewane, predict that the naira could stabilize in 2025 with the improvement of Nigeria’s external reserves and expected reforms.
The CBN’s Governor, Olayemi Cardoso, has emphasized the importance of continued monetary tightening to manage inflation, with hopes of positive results by early next year. Analysts also see the restart of Nigeria’s Port Harcourt refinery as a potential solution to alleviating the foreign exchange strain by reducing the need for imported petroleum products.
Rewane forecasts that with efficient foreign exchange management, the naira could stabilize at around N1,500/$, contingent on consistent oil prices and remittance strategies.
