The Nigerian naira experienced a significant and welcome recovery against the US dollar in both the official and parallel foreign exchange markets on Monday, December 22, 2025. This positive shift ended a period of sustained depreciation, offering temporary relief to the economy.
CBN's Strategic Dollar Injection Stabilizes Market
The Central Bank of Nigeria's direct intervention was the primary catalyst for the naira's rebound. Market operators confirmed that the apex bank sold an estimated $150 million to authorised dealers and deposit money banks in the days leading up to Monday's trading session. This injection was strategically timed to absorb pent-up demand for dollars and curb excessive volatility, especially as businesses prepared for year-end activities.
Data from the official Nigerian Foreign Exchange Market (NAFEM) window showed the local currency appreciating by 0.54% to close at ₦1,456.56 per dollar. Traders indicated that the actual dollar supply may have exceeded the officially reported figures, providing further support and helping to dampen speculative trading that has plagued the market.
Improved Trading Signals Across Official and Parallel Markets
The trading session on Monday revealed markedly improved liquidity and sentiment. The naira reached an intraday high of ₦1,466 per dollar, better than the previous close. More notably, it touched an intraday low of ₦1,431, at which some foreign payments were settled, indicating moments of significant dollar availability.
The positive momentum was not confined to the official window. In the parallel market, the exchange rate firmed to around ₦1,466 per dollar. This convergence between the official and unofficial rates is seen as a sign of short-term confidence in the CBN's ability to manage liquidity, reducing the incentive for arbitrage.
External Reserves and Oil Prices Offer Additional Support
Complementing the CBN's action, Nigeria's external reserves recorded a marginal increase, rising to $45.216 billion from $45.209 billion. While small, this uptick provides the central bank with slightly more firepower for future interventions.
Furthermore, global oil prices surged on Monday, adding a layer of external support. Brent crude rose by 2% to $61.68 per barrel, driven by geopolitical tensions involving Venezuela and Russia. As a major oil exporter, sustained higher crude prices could improve Nigeria's dollar inflows, bolstering the external reserves over time.
Cautious Optimism Amidst Lingering Challenges
Analysts view the naira's recovery as a short-term reprieve rather than a permanent solution. They caution that sustained stability will depend on consistent dollar supply, improved non-oil export earnings, and disciplined management of forex demand. The recent sharp depreciation of the naira, driven by deep dollar scarcity, underscores the underlying vulnerabilities in the market.
For now, the CBN's decisive $150 million intervention has successfully eased pressure as the year draws to a close, demonstrating its ongoing role as a key player in navigating the complex dynamics of Nigeria's foreign exchange landscape.
