The Nigerian Naira has concluded the year 2025 on a significantly stronger footing, marking a dramatic turnaround from the turbulence of the previous year. A series of strategic reforms implemented by the Central Bank of Nigeria (CBN) have begun to yield positive results, bolstering the currency against the US dollar and restoring a measure of confidence in the foreign exchange market.
From Turbulence to Stability: The Naira's 2025 Journey
The year began under a cloud of uncertainty, with the Naira trading at N1,545 to one US dollar in January. Many economists feared a continued slide, predicting a fall beyond the N1,600/$1 threshold due to intense speculative pressure. The currency did face its most volatile period between April and June, briefly touching a peak of N1,615/$1 in May.
This volatility created real challenges for businesses. Jide Alade, an electronics dealer based in Ikeja, Lagos, recounted the stress of that period to Legit.ng, stating it led to sleepless nights and an inability to plan imports due to the unpredictable cost of foreign exchange.
However, the narrative shifted as the year progressed. Through consistent intervention and policy enforcement, the CBN steered the Naira towards stability. By December 18, 2025, the currency had strengthened to N1,462.90/$1, representing a gain of over N100 compared to its closing value at the end of 2024.
Monthly Naira to Dollar Exchange Rate Snapshot for 2025
The monthly closing rates clearly illustrate the currency's path to recovery:
- January: N1,499
- February: N1,504
- March: N1,542
- April: N1,603
- May: N1,589
- June: N1,533
- July: N1,535
- August: N1,535
- September: N1,480
- October: N1,434
- November: N1,449.75
- December (as of Dec 18): N1,462.90
The 4 Key CBN FX Policies That Reshaped the Market
The Naira's resilience in 2025 can be directly attributed to several pivotal policies introduced by the apex bank. These measures enhanced transparency, improved liquidity, and curbed speculative activities.
1. The FX Code (Introduced January 28): This policy institutionalized ethical practices and strengthened governance in all foreign exchange transactions. By setting clear rules, it reduced manipulative practices and built greater confidence among market participants.
2. BDC Licence Fee Waiver: To enhance operational liquidity within the critical Bureau de Change segment, the CBN waived licensing fees. This move helped BDCs function more effectively, improving retail FX availability.
3. Enforcement of Export Proceeds Repatriation (Effective January 8): The CBN rigorously enforced rules requiring exporters to promptly repatriate their foreign exchange earnings. This policy ensured a steady and timely inflow of dollars into the official market, boosting supply.
4. Easing of PAPSS Rules (April 28): The simplification of rules governing the Pan-African Payment and Settlement System facilitated smoother and cheaper cross-border payments. This was particularly beneficial for Small and Medium-sized Enterprises engaged in intra-African trade.
Additional Supporting Measures
Other efforts that matured in 2025 also contributed significantly. These included the adoption of a B-matching electronic FX trading system for transparent rate discovery, enabling the use of Naira debit cards abroad for many Nigerians, a rise in external reserves to $45 billion, the clearance of the verified FX backlog following a Deloitte audit, and a reduction in the number of BDCs to simplify regulatory oversight.
Outlook for 2026: Analysts Voice Caution
Despite the strong finish to 2025, financial experts are sounding a note of caution for the year ahead. David Cowan, Citibank’s African economist, has projected that the Naira could face renewed pressure, potentially weakening to a range between N1,650 and N1,700 by mid-2026.
Cowan cites anticipated lower crude oil prices and a new monetary easing cycle as key factors that could pressure the exchange rate. Citi warned that weaker oil earnings could strain Nigeria's foreign exchange inflows, amplifying challenges for the currency in the coming year.
The story of the Naira in 2025 is one of regulatory resolve translating into tangible stability. While challenges remain on the horizon, the CBN's targeted policies have demonstrated a capacity to guide the foreign exchange market through periods of significant stress, offering a blueprint for future management.
