The Nigerian currency, the naira, has recorded its first gain after a week-long losses after the Christmas holidayThe local currency gained 0.17% against the US dollar, trading at N1,545.75 on Thursday, January 16, 2025, as against the N1,550 of the day beforeThe development comes amid a decline in Nigeria’s external reserves in the last 11 days, from $40.88 billion to $40.56 billion
Henzodaily.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The naira ended its week-long losses against the US dollar on Thursday, January 16, 2025, gaining 0.17%.
The Nigerian currency has been plagued by under-performance in the forex market, losing against the dollar for almost half the second week of January.
The naira gains against the US dollar, the first time in five days
Credit: Bloomberg/Contributors
Source: Getty Images
The naira continues to trade above N1,500 per dollar
The marginal losses saw the naira hover slightly above the N1,500 ceiling, as analysts say it may have found its bearings following the devaluation.
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Nigeria’s external reserves falls amid debt repayment to China, IMF, World Bank
The naira opened trading in the FX market on Thursday, January 16, 2025, negatively at N1,550.75 per dollar, representing 0.11%.
It, however, closed trading with a marginal gain of 0.17%, trading at N1,548.47 per dollar.
Currency traders in the official market quoted the dollar at a high of N1,557.50 and a low of N1,450.50, leaving an N10 margin.
Experts have said the prolonged loss of the local currency was due to inadequate forex supply, leading to high demand.
According to them, the naira will depreciate until the Central Bank of Nigeria (CBN) intervenes by selling FX to market traders.
“There is a lot of pressure on the naira from IJGBs seeking to return after the Christmas holidays. The banks and forex dealers are swarmed with demands for FX. This is pressuring the naira,” Janet Ogochukwu, economist and senior banker, told Henzodaily.ng.
External reserves decline
Meanwhile, Nigeria’s external reserves, which grew in the past year, have declined sharply due to external debt servicing.
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CBN adjusts exchange rates as naira tumbles in official and parallel markets
Data from the Central Bank of Nigeria (CBN) shows that Nigeria’s external reserves fell by $320 million, a 0.8 decline in two weeks.
As of January 13, 2025, the reserves stood at about $40.56 billion, relative to $40.88 billion on January 2, 2025.
Analysts blamed the decline on two key factors: international payments like debt servicing and the CBN’s FX interventions.
Analysts identify the reason for the reserve’s decline
Nigeria’s external debt servicing expenditures stood at $3.6 billion in the first nine months of 2024, a 39.8% increase of $1.02 billion over the $2.6 billion spent in 2023.
The decline shows the ongoing hassles posed by Nigeria’s external debt servicing obligations and the desire to stabilise the exchange rate market.
Another reason for the depletion of the reserves is the apex bank’s intervention in the FX market, which aims to stabilise the local currency by supplying dollars to meet market demands.
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Naira depreciates further against US dollar in foreign exchange market
How naira compare to other currencies against US dollars
Henzodaily.ng earlier reported that the Nigerian currency has remained relatively strong despite the dollar’s surge to a two-year high against major currencies on Monday, January 13, 2025.
The naira has remained stable against the US greenback compared to other currencies.
The naira flatly ended the first week of trading in 2025 as pressure eased on the FX market.
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Source: Henzodaily.ng