The Nigerian Naira came under renewed pressure on Thursday, December 4, 2025, as year-end demand from importers and investors continued to test the currency's stability. The Central Bank of Nigeria (CBN) released fresh data showing a marginal depreciation at the official window, while the parallel market recorded a steeper decline, widening the gap between the two exchange rates.
Official and Parallel Markets Show Divergent Movements
Fresh figures from the Nigerian Foreign Exchange Market (NFEM) revealed that the Naira weakened slightly at the official spot market. The currency closed at N1,447.8263 per US dollar, representing a depreciation of 18 kobo from the previous session. The official rate saw an intra-day high of N1,450, unchanged from Wednesday, and traded within a band between N1,446 and N1,450.
In contrast, the parallel market experienced a more pronounced movement. The Naira edged lower to N1,460 per dollar on Thursday, down from its previous rate. This decline created a spread of N12.17 between the official and black-market rates, widening the gap to 1.70 percent from 1.14 percent the day before. Market operators attributed this divergence to persistent speculative demand and delays in liquidity injections into the formal market.
Year-End Demand Pressures Currency Stability
Financial analysts point to increased seasonal activities as a key driver of the current pressure. Businesses, importers, and Foreign Portfolio Investors (FPIs) are rushing to settle outstanding obligations and fund imports ahead of the festive season closure. Despite recent foreign exchange inflows from FPIs and intermittent interventions by the CBN, traders reported that demand continues to outstrip supply.
The CBN had boosted FX supply by $186.6 billion the previous week, which led to a temporary appreciation of the Naira earlier in the week. However, this relief appears to be short-lived as year-end pressures mount. Experts warn that unless the apex bank sustains or increases its dollar supply in the coming days, the Naira could face heightened short-term volatility.
Global Commodity Markets and Broader Economic Context
The forex movements occurred against a backdrop of firming global oil prices. Brent Crude gained 1.21% to close at $63.43 per barrel, while West Texas Intermediate (WTI) rose to $59.84 per barrel. This increase was driven by investor expectations of interest rate cuts in the United States and moderated geopolitical concerns.
Meanwhile, gold prices also saw a slight uptick, with spot gold rising 0.18% to $4,213.81 per ounce, as markets awaited key U.S. inflation data for clues on future monetary policy. For Nigeria, a major oil exporter, higher crude prices could translate to improved external reserves and potentially more robust FX interventions by the CBN in the medium term.
The current scenario underscores the ongoing challenges in achieving convergence between Nigeria's multiple exchange rate windows. Market watchers will be closely monitoring the CBN's next moves to ensure stability as 2025 draws to a close.
