The Nigerian naira suffered further depreciation in March 2025, losing 2.4% at the Nigerian Autonomous Foreign Exchange Market (NAFEM) and 2.6% at the parallel market, compared to February figures.
According to the latest Afrinvest Monthly Market Report titled ‘Analysing Global and Nigerian Economies & Financial Markets’, the naira closed the month at N1,536.82/$ at the NAFEM window and N1,530/$ in the black market.
AIICO Capital, in its March macroeconomic market review, attributed the persistent naira decline to heightened demand pressures, despite the Central Bank of Nigeria (CBN) intervening with a significant $668.8m forex injection.
“The naira experienced significant depreciation in March 2025 due to persistent demand pressure in the (Nigerian) foreign exchange market.
“Despite the Central Bank of Nigeria intervening with substantial dollar sales totalling $668.8m, the naira weakened by 2.97 per cent m/m, closing at N1,536.82/$ from N1,492.49/$ at the start of the month,” AIICO Capital stated.
Rising demand from foreign portfolio investors and local corporates further strained the FX market. The report also noted that the parallel market mirrored the trend, dropping about N43.50 to N1,536.00/$.
Although CBN’s mid-month interventions briefly improved liquidity, demand consistently outpaced supply.
“In the final week, despite continued CBN dollar sales and a slight appreciation of 0.5 bps, the naira remained under pressure. On a quarterly basis, the naira depreciated by 7 bps q/q at the NFEM window. Meanwhile, external reserves fell by c.$110m to $38.31bn,” AIICO Capital added.
Outlook for the Naira
Looking ahead, AIICO forecasts that the CBN will sustain FX liquidity injections in a bid to stabilize the naira. However, potential global headwinds—including rising US tariffs and retaliatory measures—could trigger volatility and capital flight.
The CBN has acknowledged that recent pressures on the foreign exchange rate reflect broader global macroeconomic shifts, especially the impact of new tariffs imposed by US President Donald Trump.
In a recent statement, Director of the CBN Financial Markets Department, Omolara Duke, confirmed that the apex bank injected $197.71m into the forex market between April 3 and 4, 2025, selling dollars between N1,519 and N1,595.20/$ to authorized dealers.
“In line with its commitment to ensuring adequate liquidity and supporting orderly market functioning, the CBN facilitated market activity on Friday, April 4, 2025, with the provision of $197.71m through sales to authorised dealers… The CBN continues to monitor global and domestic market conditions and remains confident in the resilience of Nigeria’s foreign exchange framework,” Duke said.
She also reminded all authorized dealers to comply with the Nigeria FX Market Code and uphold the highest standards in their dealings.
Increased FX Market Volatility
Throughout the first week of April, the naira exchange rate remained volatile. It traded between N1,525–N1,535/$ early in the week, supported by CBN interventions and moderate offshore inflows. But midweek, increased offshore demand, falling oil prices, and Trump’s tariff announcements reversed the gains, sending the naira as high as N1,570/$.
Despite further CBN efforts, the naira fell 1.97% week-on-week, closing at N1,567.02/$. Meanwhile, foreign reserves dipped by $149m to $38.15bn.
End of Naira-for-Crude Raises Concerns
Analysts at Afrinvest also warned that the termination of the naira-for-crude initiative would intensify pressure on the local currency. As domestic refineries and PMS importers turn to the FX market, foreign exchange demand is expected to surge.
“Against this backdrop, we expect the naira to remain pressured near-term, barring any unforeseen shocks,” Afrinvest noted.
Offshore Flight and Falling Oil Prices Weigh on FX Market
CardinalStone’s latest macroeconomic update further highlighted that increased local dollar demand and offshore investor outflows have placed heavy pressure on the Nigerian FX market. With a -8.6% one-month return and -5.8% YTD, the naira’s performance has deteriorated significantly.
They also flagged concerns about the federal government’s revenue shortfall risk, noting a drop in crude oil production from 1.74mbpd in January to 1.67mbpd in February, amid a 14.2% YTD decline in oil prices.
Former Zenith Bank chief economist, Marcel Okeke, linked the ongoing tariff war to a looming risk of imported inflation, warning that Nigeria’s import dependence makes it especially vulnerable.
“We’re likely to see an uptick in imported inflation,” he said.