The Nigerian currency witnessed a return of high market volatility in the Nigerian unofficial market amid increased demand and a strong U.S dollar index.
The naira lost value at the parallel market to N1,565/$ during the week’s final working session, indicating heightened speculation in the foreign exchange market.
Data released by the Central Bank of Nigeria on Thursday showed that the naira ended July 2025 at N1,533.5/$ on the Nigerian Foreign Exchange Market, the official market.
This is roughly 0.25% weaker when compared to the N1,529.71/$ it closed at in June, suggesting that the Nigerian foreign exchange market was relatively stable.
The spread between the official and parallel market rates widened again. The latest spread falls to N30/$.
Midway through the month, the naira rose to a four-month high against the haven currency, settling at N1518/$ on July 14th.
The mid-month data indicated a positive momentum for the country’s currency, which is the naira’s best performance since March 14, 2025, and the first time it has fallen below N1520/$ since then.
The Nigerian currency retraced to the range of 1,530/$ – 1,535/$ at the NFEM. The CBN had achieved relative stability in the Nigerian foreign exchange market and created incentives that boosted the inflow of forex from foreign investors.
Renaissance Capital projected the Nigerian naira will likely lose about 26% in value despite the recent convergence in comparison to its historical real effective exchange rate.
The Nigerian upper-middle/ elite population needing to travel abroad during the summer led to a spike in demand.
However, in the first seven months of this year, the local currency maintained a reasonable degree of stability amid reforms executed by the Nigerian Apex Bank, despite other prevailing pressures.
Additional positive investor and market sentiment can drive more stability and further naira appreciation, as stated in a new report by United Capital Research. They forecast that the naira will close 2025 within the N1,490/$ – N1,520/$ price range.
The greenback recorded its first monthly increase of the year on the last Thursday against major currencies because of softening US-China trade conflicts as well as business and economic optimism at home.
The US Federal Reserve chose to keep the rates unchanged on Wednesday, siding with the rest of the committee and ignoring calls by President Trump to reduce the rates.
In his remarks, the Fed Chairman Jerome Powell also stressed he was not on the path towards a rate cut policy anytime soon.
The US Dollar was almost at a two-month high, the hypothetical 100, as currency traders increasingly hold the greenback, backed by fresh US data and a stronger message from the Fed Chairman, as well as the impending PCE Prices Index report.
The US Dollar was almost at a two-month high, the hypothetical 100, as currency traders increasingly hold the greenback, backed by fresh US data and a stronger message from the Fed Chairman, as well as the impending PCE Prices Index report.
The sharp rise of the Dollar, its index, which measures the greenback’s strength against its main peers in the global foreign exchange currency market, looks set to breach the 100-resistance mark after a spike of almost 3% during the preceding five days.
This sudden rally could be attributed to the Fed sustaining its core interest rate unchanged, which was received well, as PresidentTrump intended to create a stir after his comments around rampant austerity spending.
The U.S Fed chief, while commenting on the U.S economy, noted that it was handling inflationary pressures and banking on some stimulus options, calling it a wait-and-watch approach to adjust the economy after the Trump-induced tariffs, which augured well.
The odds of a September cut were slashed to 43 percent from 63 percent earlier this week, and investors reduced their bets on rate cuts for this year to 35 basis points from about 50 basis points before the meeting.
The dollar continued to rise after the Fed’s decision, and it is in a bullish position before the US PCE Prices Index data is released.
With the Core PCE Price Index remaining stable at a yearly rate of 2.7 percent and the annual rate rising to 2.5 percent from the previous 2.3 percent, the market consensus predicts hotter headline inflation.