Naira Strengthens Below ₦1,500/$
The Naira delivered a strong performance against the US Dollar this past week, closing significantly lower than its opening, a welcome sign for businesses and consumers alike. The market demonstrated sustained momentum as the local currency continued its consolidation phase, hinting at the effectiveness of recent monetary policy adjustments.
We break down the key movements from September 21st to September 27th, 2025, analyze the driving forces, and provide an outlook for the upcoming week.
The Week in Review: A Steady Decline to ₦1,500/$
The trading week kicked off with the Naira closing at ₦1,517 to the dollar on Sunday, September 21st. The currency immediately showed its strength, registering a sharp drop over the first few days.
Key Movement | Rate (Close) | Date |
|---|---|---|
Weekly Open (Close 9/21) | ₦1,517 | 9/21/2025 |
Lowest Point | ₦1,491 | 9/25/2025 |
Weekly Close | ₦1,500 | 9/27/2025 |
Net Appreciation | ₦17 | (~1.12%) |
The most significant appreciation was observed on September 24th and 25th, where the Naira closed at ₦1,492 and ₦1,491, respectively. This strong showing marked the first time in recent weeks that the rate has broken below the ₦1,500 psychological barrier, demonstrating market confidence.
The week culminated with a steady closing rate of ₦1,500 on Saturday, September 27th, resulting in a net appreciation of ₦17 for the period.
Driving Forces: Why the Naira Gained
Several factors, both domestic and global, contributed to the Naira’s robust showing:
1. CBN Policy Dominance (Local Factor)
The sustained positive trend strongly suggests that the Central Bank of Nigeria’s (CBN) continuous intervention and administrative reforms are taking hold.
Traders and market participants likely reacted positively to:
Dollar Supply: Increased dollar liquidity, possibly through ongoing clearance of FX backlogs or higher foreign currency sales to licensed Bureau de Change (BDC) operators.
Monetary Tightening: The CBN may have recently tightened Naira liquidity in the system, making it more expensive to speculate on the dollar and forcing increased dollar sales by market participants.
2. Global Oil Market Stability (External Factor)
As a major oil exporter, Nigeria benefits significantly from stable or rising crude oil prices. A stable global market ensures a predictable inflow of foreign currency, boosting Nigeria’s external reserves and strengthening the CBN’s capacity to intervene when necessary. This underlying stability gives the Naira a solid foundation.
3. Investor Confidence
Breaking the ₦1,500 barrier served as a major confidence boost. When the exchange rate demonstrates resilience, foreign portfolio investors (FPIs) are often more willing to re-enter the Nigerian market, further increasing dollar supply and reinforcing the local currency’s strength.
Outlook for the Week Ahead (September 28 – October 4)
The immediate outlook is one of cautious consolidation. The key question for the week ahead is whether the Naira can maintain its position below the ₦1,500 mark and establish a new, stronger trading band.
- Potential Stability: Following a significant gain such as the one observed this week, the market typically enters a phase of consolidation. We anticipate the Naira to trade within a narrow band, potentially between ₦1,490 and ₦1,510.
- The Global View: Investors will be keenly watching upcoming global economic releases, particularly any US jobs or inflation data. Strong US data could lead to a temporary strengthening of the dollar globally, putting slight pressure on the Naira.
- The CBN’s Role: Market stability is currently highly dependent on the CBN’s consistent ability to manage dollar liquidity. Any perceived slowdown in the supply of foreign currency could trigger speculative activity and test the ₦1,500 resistance level.
Our forecast: Expect the Naira to hold its ground, likely stabilizing slightly above the ₦1,490 low seen last week, but the upward pressure seen at the end of the trading period (the close at ₦1,500) suggests it might be tested early in the week.
Disclaimer: This analysis is based on available data and general market assumptions. All foreign exchange trading involves risk.
