The naira is reversing its gains against the US dollar after a week-long appreciation in the final week of January.

The Nigerian currency opened trading negatively in February after a massive bullish run in January when the CBN implemented a raft of reforms to stabilise it.

The naira closes negatively in the official window

Experts lauded the naira's gains due to CBN’s policies, such as the launch of the FX Code to boost liquidity and transparency.

However, the naira is rapidly depreciating again in the official foreign exchange window but remains strong relative to previous months’ performance.

On Wednesday, February 5, 2025, the naira closed negatively, losing 0.07% of its value to trade at N1,499.76, down from N1,498 it traded the previous day.

The naira appreciates in the parallel window

The naira’s loss occurred after the Central Bank of Nigeria (CBN) extended the deadline for Bureau de Change (BDC) operators to access forex in the official window.

The extension allows the BDCs to purchase $25,000 weekly via the official window to help stabilise the naira.

Data from the FMDQ Exchange shows that currency dealers quoted the dollar at a high of N1,500.50 per dollar and a low of N1,495.

Meanwhile, the naira closed in the green in the parallel market on Wednesday, February 5, 2025, appreciating N1,599 from N1,601 per dollar.

Expert asks CBN to close exchange rate windows

Experts say the exchange rate windows are nearing convergence as CBN’s reforms take root. Osaze Igho, economist and FX trader, said the gap between the two windows needs to narrow for the naira to find its actual value.

“I am guessing the naira’s actual value is in the range of N1,500 but the parallel window has widened the gap that dealers are now quoting varied rates in the markets,” he said.

Legit.ng previously reported that Nigeria’s FX reserves declined by about $1.19 billion in three weeks amid moves by the Central Bank of Nigeria (CBN) to stabilise the naira.

External reserves decline

Data from the CBN shows that the gross FX reserves hit a high of $40.92 billion as of January 6, 2025, from $40.977 billion in December 2024.

The reserves began to moderate from $40.56 billion as of January 13, 2025, to $39.723 billion as of January 31, 2025.

The decline was revealed as CBN had not published the external reserves’ position in February.

However, Financial Derivatives Company (FDC) disclosed in its outlook report that Nigeria’s gross external reserves would drop by 11.47% in 2025 to $36.21 billion in 2025 and $37.65 billion in 2026 from a high of $40.9 billion in 2024.

The company’s analysts also expect the exchange rate to average N1,586 2025 from N1,615 in 2024.