The naira recorded its strongest annual performance in more than a decade in 2025, appreciating by over seven per cent against the United States dollar, supported by broad foreign exchange reforms implemented by the Central Bank of Nigeria.
Data released by the apex bank showed that the local currency strengthened by 7.4 per cent or N105.61 during the year, closing at N1,435.75 per dollar on Wednesday, the final trading day of 2025, compared with N1,541.36 at the beginning of the year on January 2, 2025.
The positive performance extended into the new year, with the naira reaching an all-time high of N1,419.06 on Tuesday, January 6, 2026. This marked one year since the introduction of the Electronic Foreign Exchange Management System.
CBN data showed that the currency appreciated by 0.7 per cent or N10.24 from N1,429.30 quoted at the close of trading on Monday at the Nigerian Foreign Exchange Market.
On a year-on-year basis, the naira strengthened by 8.07 percent to N1,419.06, representing a gain of N114.54 compared with N1,533.60 quoted on the corresponding period of January 6, 2025, highlighting a sustained recovery in the foreign exchange market.
In the parallel market, also known as the black market, the naira traded flat at N1,490 per dollar, unchanged from the rate recorded on Monday, which was the first trading day of the week.
Nigeria’s external reserves, which provide the Central Bank of Nigeria with the capacity to intervene in the market and manage foreign exchange volatility, also recorded a significant improvement.
Data published on the CBN’s website showed that external reserves rose to $45.60 billion as of January 5, from $40.88 billion at the beginning of the year, reflecting stronger inflows and reduced pressure on the foreign exchange market.
The Governor of the Central Bank of Nigeria, Olayemi Cardoso, said the foreign exchange market was largely paralysed when the current leadership assumed office, noting that a backlog of over $7 billion in unmet foreign exchange obligations had severely undermined market confidence.
He added that the gap between the official exchange rate and the parallel market rate had widened to more than 60 percent at the time, creating distortions and encouraging rent-seeking behaviour.
“Perhaps the most visible sign of renewed confidence in our economy is the transformation of the foreign exchange market,” Cardoso said.
He explained that over the past year, the Central Bank of Nigeria has sustained the unification of multiple exchange-rate windows and fully cleared the once-crippling foreign exchange backlog, thereby restoring credibility and enabling businesses to plan with greater certainty.
According to Cardoso, the introduction of the Nigerian Foreign Exchange Code has established clear standards on transparency, ethics, governance and fair dealing among authorised dealers.
He further stated that the deployment of the Electronic Foreign Exchange Management System, powered by Bloomberg BMatch, has transformed foreign exchange trading through mandatory order submission, real-time regulatory visibility and improved price discovery.
These reforms, he said, have reduced opacity and manipulation, restored market discipline and narrowed the gap between the official and parallel market rates to under 2 percent from more than 60 percent previously.
Central Bank data showed that the premium between the Nigerian Foreign Exchange Market and bureaux de change rates narrowed significantly to about 2.11 percent as of December 9, 2025, compared with 5.92 percent in 2024, reflecting stronger convergence across market segments.
A similar trend was observed in November 2025, when the premium declined to about 2.17 percent.
The apex bank said ongoing reforms are expected to help sustain exchange-rate stability, while external reserves are projected to increase further.
According to the Central Bank of Nigeria, external reserves are forecast to rise to about $51.04 billion in 2026 from an estimated $45.01 billion in 2025, supported by reduced foreign exchange pressures, higher oil earnings, sovereign bond issuance and increased diaspora remittance inflows.
The CBN also noted that the Dangote Refinery’s expansion of its nameplate capacity to 700,000 barrels per day from 650,000 barrels per day in 2025, with a medium-term target of 1.4 million barrels per day, is expected to further reduce import dependence, support reserve accumulation and reinforce stability in the foreign exchange market.
Muda Yusuf, Director and Chief Executive Officer of the Centre for the Promotion of Private Enterprise, said exchange-rate stability ranked among the most visible economic achievements of 2025.
He noted that the naira largely traded within the N1,440 to N1,500 per dollar range during the year, with periods of marginal appreciation helping to boost business confidence.
According to Yusuf, improved exchange-rate stability helped ease imported inflationary pressures and restored predictability to pricing, contracting and investment planning.
