The Nigerian naira faced renewed pressure on Tuesday, December 16, 2025, leading to a widening chasm between its official and unofficial market valuations. The exchange rate gap expanded to approximately N25, highlighting persistent volatility in the foreign exchange windows as year-end dollar demand intensified.
Official Market Feels the Squeeze of Dollar Shortage
During trading on Tuesday, the local currency exhibited a mixed performance before ultimately weakening. Data from the Nigerian Foreign Exchange Market (NFEM) revealed that the official spot rate, initially steady at ₦1,451.82 per dollar, succumbed to pressure and closed at ₦1,456.20. This represented a depreciation of ₦4.38 for the session, with trades recorded between ₦1,454.00 and ₦1,457.00 per dollar.
Analysts at AIICO Capital Limited attributed the weakness to thin dollar inflows from key sources like exporters and foreign portfolio investors. The situation was exacerbated by the absence of immediate Central Bank of Nigeria (CBN) intervention to bolster liquidity, leaving the market exposed to mounting demand from importers finalizing year-end payments and international transactions.
Parallel Market Tells a Different Story
In a contrasting trend, the naira experienced marginal appreciation in the parallel, or black, market segment. It traded around ₦1,476 per dollar, a slight improvement from previous levels. This divergence underscored a structural imbalance in Nigeria's FX system, where informal channels are often quicker to adjust to market dynamics, such as inflows from offshore transfers, which helped ease pressure there.
The growing gap between the regulated and informal markets, now at about N25, points to ongoing challenges in aligning official dollar supply with robust domestic demand, especially during peak seasons like Christmas.
CBN's Strategy and External Reserves Buffer
Despite the short-term depreciation, market sentiment retains a degree of cautious optimism, anchored by expectations of continued CBN support. Analysts suggest the naira could close the year relatively stable, with ₦1,500 per dollar seen as a worst-case scenario if the apex bank sustains its interventions.
The CBN has previously signaled its commitment to stability through targeted actions, including a recent $150 million sale to authorised dealer banks aimed at improving liquidity. Furthermore, Nigeria's external reserves continue to provide a critical buffer, having risen to $45.47 billion, an 11.24% increase year-to-date. This buildup is notable as it occurred against a backdrop of declining global oil prices, with Brent crude falling below $60 per barrel.
The combination of seasonal demand, supply constraints, and external economic factors ensures that the naira's trajectory will remain a key focus for investors, businesses, and policymakers as 2025 draws to a close.
