Week Ending: Friday, October 24, 2025
The Naira continued its gradual weakening trend, depreciating 0.34% against the USD to ₦1,475.00. The GBP and EUR saw sharper declines of 2.2% and 1.5% respectively.
Month-end corporate demand, combined with constrained supply due to modest oil prices, kept pressure on the currency, while the official-to-parallel market spread widened, signaling persistent liquidity segmentation.
Exchange Rate Summary
Parallel Market
- USD Range: ₦1,490 – ₦1,495 throughout the week
- Official-to-Parallel Spread: ₦15-40 (indicating liquidity segmentation)
Key Drivers
Inflation (Positive)
- 18.02% y/y in September (continued moderation from August)
- Disinflationary trend reduces inflation premium on naira
Oil Prices (Neutral to Weak)
- Brent: $65-66/barrel during the week
- Provides some dollar receipts but below earlier 2025 highs
- Limits improvement in FX supply
CBN Policy (Targeted)
- Maintained targeted NFEM interventions via Investors & Exporters window
- Calibrated approach—not eliminating volatility
- Focus on FX code compliance continues
Market Dynamics
Demand Pressures:
- Corporate importers stepping up purchases
- End-month obligations driving elevated demand
- Periodic profit-taking in fixed-income markets creating episodic dollar demand
Supply Constraints:
- Remittances and export receipts steady but insufficient
- Oil receipts moderate at current Brent levels
- Speculative positioning on thin liquidity days widening NFEM-parallel gap
Outlook: Next Week
Base Case
Mild depreciation pressure likely to continue absent fresh catalysts
Key Factors to Watch
- Daily NFEM VWAP prints – for trend confirmation
- CBN communiqués – any policy signals or intervention changes
- Brent direction – moves above mid-$60s would help
Stabilization Scenarios
- Increased NAFEX allocations or outright CBN sales
- Unexpected oil price rebound above mid-$60s
- Strong remittance surge
Summary
The naira faces continued modest pressure as month-end demand meets constrained supply. The widening official-to-parallel spread signals market segmentation, while the CBN’s measured intervention approach allows gradual adjustment.
Without a material change in oil receipts or CBN strategy, expect the current weakening trend to persist.
Data Sources: CBN, FMDQ/NAFEX, NBS, Reuters, Vanguard, BizWatch Nigeria, Proshare
