The Nigerian Naira ended the week on a slightly weaker note against the U.S. dollar, closing at ₦1,438.5/$1 at the official foreign exchange market on Friday, November 7, 2025. This marginal depreciation came despite a continued increase in the country’s foreign reserves, which analysts say reflects stronger foreign exchange inflows and improved macroeconomic management by the Central Bank of Nigeria (CBN).
According to figures published on the CBN’s official website, the Naira experienced minor fluctuations throughout the week — trading at ₦1,438/$1 on Monday, ₦1,441.75/$1 on Tuesday, ₦1,440/$1 on Wednesday, and ₦1,437.5/$1 on Thursday, before settling at ₦1,438.5/$1 on Friday. Although these movements appear relatively stable, the overall trend still indicates a modest depreciation from the previous week’s close of ₦1,427.5/$1.
Parallel Market Records Slight Appreciation
In contrast to the official window, the Naira showed modest strength in the parallel (black) market, appreciating to ₦1,445/$1 from ₦1,455/$1 recorded midweek. Traders in Lagos and Abuja reported that the currency traded between ₦1,445 and ₦1,460 per dollar during the week, suggesting mild volatility but a generally firmer outlook compared to late October.
Market participants attributed the parallel market’s relative stability to a surge in dollar inflows from diaspora remittances, coupled with end-of-month conversions by corporate entities. These inflows temporarily boosted liquidity and helped narrow the gap between the official and parallel market rates. However, currency traders warned that the trend may be short-lived as festive season demand and election-related spending are expected to heighten dollar demand in the coming weeks.
Week-on-Week Performance and Context
On a week-on-week basis, the Naira weakened by ₦11, closing at ₦1,438.5/$1 compared to ₦1,427.5/$1 the previous Friday, October 31, 2025. The slight depreciation interrupted a two-week streak of gains recorded in late October, when the local currency appreciated due to increased confidence in CBN reforms and improved FX liquidity conditions.
The current pullback signals renewed pressure on the Naira as importers ramp up dollar purchases ahead of the Christmas and New Year shopping season. Analysts also point to speculative trading activity and short-term market corrections as contributing factors to the week’s weaker close.
Foreign Reserves Climb to $43.32 Billion
Despite the mild depreciation, Nigeria’s foreign reserves continued their upward trajectory, rising to $43.32 billion from $43.17 billion the previous week. This marks one of the country’s strongest reserve levels in months and reflects increased oil receipts, steady portfolio inflows, and growing investor confidence in the Nigerian economy.
The CBN attributed the rise in reserves to a combination of factors, including autonomous FX inflows from non-oil exports, higher crude oil production, and renewed foreign investor participation following the implementation of market-friendly policies under Governor Olayemi Cardoso’s leadership.
“The steady accumulation of reserves indicates that Nigeria’s external sector is gaining resilience,” a CBN official noted. “This provides a stronger buffer to manage short-term volatility and supports confidence in the Naira.”
Analysts Warn of Near-Term Volatility
While the recent reserve build-up offers a positive signal, financial analysts caution that seasonal pressures could reintroduce volatility in the short term. As the country approaches the festive season and the start of political campaign spending for the 2027 general elections, dollar demand is expected to rise significantly.
Economist Abas Adelakun told reporters that although the fundamentals are improving, the next few months will test the durability of the CBN’s reforms.
“What we’re seeing now is cautious optimism,” he said. “Foreign reserves are climbing, but structural challenges remain. Sustaining the Naira’s stability will require deepening export diversification and curbing speculative activity.”
Analysts from Standard Bank echoed similar concerns, warning that fiscal spending linked to electioneering could weaken the Naira in 2026 and 2027.
“Election-related expenditures and primary campaigns scheduled to begin in early 2026 will likely boost liquidity and increase foreign exchange demand,” the bank’s report stated. “However, a robust reserve position should allow the CBN to manage short-term pressures effectively.”
Policy Outlook and Budget Context
President Bola Ahmed Tinubu, in his December 2024 budget presentation, projected a stronger and more stable currency for 2025. The administration based its budget assumptions on an exchange rate target of ₦1,500/$1 and a reduction in inflation from 34.6% to 15% by year-end.
While the current exchange rate remains above the government’s target, analysts argue that the recent improvement in reserves, coupled with ongoing monetary tightening, could help the Naira regain ground over the medium term.
However, the sustainability of these gains depends on Nigeria’s ability to expand non-oil exports, boost fiscal revenues, and control inflation. Without addressing these structural constraints, experts warn that short-term improvements may not translate into lasting currency stability.
