The Naira continues to face significant pressure against the US Dollar, as the official exchange rate opened at ₦1,555.00 per $1 on January 21, 2025, and closed slightly stronger at ₦1,552.58 per $1 on January 22, 2025, according to the FMDQ Security Exchange. However, the parallel market tells a harsher story, with the Naira trading as high as ₦1,660 per Dollar, highlighting a widening gap between official and black-market rates.
In June 2023, the Central Bank of Nigeria (CBN) announced a pivotal unification of all FX market segments, introducing a “Willing Buyer, Willing Seller” model at the I&E window. This shift effectively allows market forces to determine the Naira’s value while abolishing segmentation and reinstating two-way quotes to enhance market transparency. However, despite these reforms, the Naira’s performance remains strained, with dollar demand outpacing supply in both official and black-market channels.
The move to a free-floating exchange rate was seen as a bold step to stabilize the market, yet challenges persist. Market-driven exchange rates often expose currencies like the Naira to sharp depreciation, especially when the underlying economy faces headwinds. For Nigeria, a focus on boosting exports, curbing dollar demand, and strengthening monetary policy remains crucial to bridging the gap between official and parallel market rates while stabilizing the currency long-term.