The Naira appreciated against the United States dollar in the official market on Friday, 28th February , 2025, trading at N1,492.49, reflecting the impact of ongoing reforms by the Central Bank of Nigeria (CBN).
According to data from the CBN’s website, the Naira strengthened by N6.57, marking a 0.44% increase compared to Thursday’s closing rate of N1,499.07. On Wednesday, the currency had traded at N1,499.11 to the Dollar.
The Naira’s relative stability has been linked to CBN policy adjustments aimed at promoting transparency in the foreign exchange (FX) market.
Economists have applauded the CBN’s efforts, noting the currency’s steady recovery since December 2024. However, some experts remain cautious.
Prof. Jonathan Aremu, a former CBN Director and Professor of International Economic Relations at Covenant University, advised against premature optimism.
“But it may not be time to celebrate yet because, within this period, we have also seen moments when the Naira depreciated,” he said.
Aremu emphasized the need to boost domestic production to sustain the Naira’s positive momentum.
“The quantity theory of money states that money supply and population value must equal price and transaction volume in the economy,” he explained.
“If policy only targets money supply without increasing transactions, the expected appreciation of the Naira will not materialise. The economy needs a higher volume of goods and services. Many goods are available, but their prices depend on supply and demand.
“Focusing only on monetary policy is insufficient. More emphasis should be placed on increasing production,” he added.
Aremu also pointed out that a decline in foreign exchange demand is partially due to reduced consumer purchasing power amid tough economic conditions.
“The CBN should not only focus on reducing money supply but also support the availability of quality goods and services,” he said.
In its weekly economic update, Cordros Securities attributed the Naira’s gains to easing demand pressures, despite a continued decline in FX reserves.
The report highlighted that reserves fell by $241.50 million to $38.46 billion as of Feb. 27, marking the seventh straight week of decline.
“We expect FX liquidity to remain strong as a more efficient market and improved confidence continue to support inflows from autonomous sources,” the report stated.
“The CBN is also expected to intervene during periods of high volatility, ensuring the Naira remains stable in the near term,” it added.