The naira closed 2025 with a gain of over N100 against the United States dollar across foreign exchange markets, buoyed by improving external buffers, sustained policy reforms and better liquidity conditions, as Nigeria’s external reserves expanded by 11.3 percent year-on-year.
Data from the Central Bank of Nigeria showed that the naira appreciated by 6.96 percent, or N100.07, on a year-on-year basis to close at N1,435.75 per dollar on Wednesday, the final trading day of 2025, compared with N1,535.82 recorded in the corresponding period of December 31, 2024, at the Nigerian Foreign Exchange Market.
On a full-year basis, the local currency strengthened further, gaining N105.61 or 7.4 percent from N1,541.36 traded at the start of the year on January 2, 2025, according to CBN data. The naira also recorded a day-on-day appreciation of 0.7 percent, gaining N9.93 against the dollar from N1,445.68 quoted on Tuesday at the NFEM.
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The appreciation trend was equally evident in the parallel market, also known as the black market, where the naira gained N165 or 11.1 percent year-on-year to close 2025 at N1,485 per dollar on Wednesday, compared with N1,650 in December 2024. On a 12-month trading basis, the currency strengthened by 11.8 percent, or N175, from N1,660 quoted at the beginning of the year.
Nigeria’s external reserves, which provide the CBN with critical capacity to support the naira and manage foreign exchange volatility, rose to $45.48 billion as of December 30, 2025, from $40.88 billion in the corresponding period of 2024, according to data published on the CBN’s website.
Commenting on developments 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 stood out as one of the most visible achievements of 2025. He noted that the naira largely traded within the N1,440 to N1,500 per dollar range, with episodes of marginal appreciation helping to strengthen business confidence. According to him, improved stability eased imported inflation pressures and restored predictability to pricing, contracting and investment planning.
Analysts at FSDH Merchant Bank also said foreign exchange market conditions improved significantly in 2025, supported by policy reforms, tight monetary conditions and easing structural demand for foreign currency. They said the naira traded at an average of N1,518.9 per dollar during the year, while the end-period rate appreciated to about N1,451 per dollar, from N1,535.8 per dollar at the end of 2024. The analysts noted that the improvement reflected a more orderly price discovery process rather than heavy administrative intervention.
According to FSDH, elevated interest rates helped attract portfolio inflows, improved foreign exchange liquidity and reduced volatility in the market. They said external buffers strengthened, with reserves rising to about $45.2 billion in 2025 from $40.9 billion in 2024. Structural pressures on foreign exchange demand also eased, driven largely by the full operation of the Dangote Refinery, which reduced petroleum product imports and lowered foreign exchange outflows. They added that improved exchange-rate stability enhanced planning certainty, reduced hedging costs and supported disinflation, although vulnerability to external shocks remains.
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The CBN noted that the premium between the Nigerian Foreign Exchange Market and the Bureaux de Change rates narrowed significantly to about 2.11 percent as of December 9, 2025, compared with 5.92 percent in 2024, reflecting greater 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 in the foreign exchange market are expected to help sustain exchange-rate stability, while external reserves are projected to rise further. According to the CBN, reserves are forecast to increase to about $51.04 billion in 2026, from an estimated $45.01 billion in 2025. The projected growth is expected to be supported by reduced pressure in the foreign exchange market, 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 and support the accumulation of external reserves, reinforcing stability in the foreign exchange market.