The naira depreciated by 2.4% and 2.6% at the Nigerian Autonomous Foreign Exchange Market (NAFEM) window and parallel market, respectively, in March 2025 compared to February, despite a $668.8m intervention by the Central Bank of Nigeria (CBN).
According to Afrinvest’s Monthly Market Report, the naira weakened to N1,536.82/$ at the NAFEM window and N1,530.00/$ in the parallel market. Similarly, AIICO Capital’s March macroeconomic update confirmed intense demand pressure on the currency, with a monthly depreciation of 2.97%, from N1,492.49/$ to N1,536.82/$.
Demand remained strong, particularly from foreign portfolio investors and domestic corporates. Despite mid-month improvements in liquidity, demand continued to outweigh supply. By the final week of March, the naira still faced pressure, with only a marginal appreciation of 0.5 basis points. Overall, it depreciated 7bps quarter-on-quarter at the NAFEM window. Nigeria’s external reserves also fell by about $110m, closing at $38.31bn.
Looking ahead, AIICO Capital expects the CBN to maintain liquidity to stabilise the naira, although global risks like U.S. tariffs and potential retaliatory actions could increase volatility and trigger capital flight.
The CBN acknowledged the pressure on the naira from global economic shifts, including tariffs imposed by U.S. President Donald Trump. To cushion the effect, the bank sold $197.71m to authorised dealers between April 3 and 4, with exchange rates ranging between N1,519 and N1,595.20/$.
Omolara Duke, Director of Financial Markets at the CBN, stated the intervention was part of efforts to ensure liquidity and market stability. The apex bank also reminded dealers to comply with the Nigeria FX Market Code and maintain best practices in their transactions.
During the past week, the naira experienced increased volatility. Early stability—trading between N1,525 and N1,535/$—gave way to sharp depreciation midweek due to a surge in offshore demand, falling oil prices following OPEC+’s production increase, and global risk aversion sparked by Trump’s tariff actions. The naira dropped by 1.97% week-on-week to close at N1,567.02/$, with reserves down $149m to $38.15bn.
Analysts at Afrinvest warned that the end of the naira-for-crude initiative could further strain the FX market, as refineries and PMS importers increase foreign currency demand. They forecast continued pressure on the naira in the near term unless unexpected changes occur.
CardinalStone, in its macroeconomic report, added that offshore investor outflows and heightened local demand have weakened the naira, which saw a one-month return of -8.6% and year-to-date loss of -5.8%. The firm also flagged falling oil production—down to 1.67mbpd in February from 1.74mbpd in January—and a 14.2% year-to-date drop in oil prices as risks to Nigeria’s revenue targets and fiscal balance.
Former Zenith Bank chief economist Marcel Okeke also warned of inflationary risks, saying the Trump-led tariff war could spark global inflation, with Nigeria particularly vulnerable due to its dependence on imports.
