After days of depreciation, the naira traded flat in the official Electronic Foreign Exchange Market (EFEMS) on Thursday, January 9, 2025.

The local currency depreciated most of the week, falling to N1,541 per dollar from the N1,535 it opened the year with.

Naira appreciates in the black market

Analysts have projected a tough January for the naira as demand for the US dollar returns after the festive season, sparking volatility.

According to them, the demand for the dollar will increase as importers and travellers seek forex to meet their transactional needs.

Data from the FMDQ Exchange reveals that the naira opened trading at N1,538.50 per dollar on Thursday, January 9, 2025, and closed at N1,541.23, the same as the previous day’s rate.

According to the data, traders quoted the dollar at a high of N1,547.50 and a low of N1,535.

Meanwhile, the naira appreciated on the streets, from N1,670 per dollar to N1,660.

Demand is rising as volatility returns

Abbas Yishau, a currency trader, disclosed that the parallel market traders experienced a moderate demand for the dollar, stating that they expect demand to rise in the second week of January.

“The demand for the dollar is rising gradually, but not at the pace we expect. But we know that business activities have not fully picked up after the festive season,” he said.

Volatility returned to the forex market after the naira appreciated on the first trading day of the year, trading at N1,538 per dollar, raising hope of a stronger naira in 2025.

Nigeria’s external reserves rise

Meanwhile, Nigeria’s external reserves grew by $591.78 million in January following the Nigerian government’s $2.2 billion Eurobond auction.

The reserves increased from $40.292 billion on December 2, 2024, to $40.884 billion, representing a monthly growth of 1.47%. The growth shows the effectiveness of Nigeria’s measures in stabilising its FX exchange position.

Breakdown of external reserves increase

According to data from the Central Bank of Nigeria (CBN), the reserves have steadily and consistently increased in the past month.

As of December 2, 2024, the reserves were $40.292 billion and grew incrementally over the month, hitting $40.376 billion by December 9, adding $84 million.

The initial increase shows the immediate effect of the Eurobond proceeds flowing into the financial system.