"Naira in Free Fall – Records Steepest Decline Against Dollar This Week"

On Wednesday, May 7, 2025, the Nigerian naira experienced its steepest single-day decline this week, dropping by ₦15 to close at ₦1,625 per dollar in the parallel market. This marks a significant depreciation from the ₦1,610 rate recorded just a day earlier.

In the official market, the naira also weakened, sliding to ₦1,608.60 per dollar from ₦1,605.62 on Tuesday. This decline continues a three-day streak of losses, reflecting persistent pressures on Nigeria's currency.

🔍 Factors Contributing to the Naira's Decline

Several elements are influencing the naira's downward trajectory:

• Foreign Exchange Scarcity: The Central Bank of Nigeria (CBN) has been injecting liquidity to stabilize the naira. However, traders report that the naira is trading around ₦1,607 to the dollar, with expectations to remain between ₦1,600 and ₦1,615.

• Dangote Refinery's Currency Shift: The Dangote Petroleum Refinery announced a temporary halt on fuel sales in the local naira currency due to discrepancies between naira sales and dollar crude purchases. This move could lead to increased petrol prices and further weaken the naira as traders seek US dollars\.

• Rising Public Debt: Currency depreciation has significantly impacted Nigeria's public debt, which increased by ₦8.02 trillion in Q3 2024, reaching ₦142.3 trillion. The exchange rate weakened from ₦1,470.19/$ in June to ₦1,601.03/$ by the end of September.
  

📉 Economic Reforms and Outlook

Despite the naira's challenges, the Nigerian government remains optimistic about economic reforms:

• Economic Growth Projections: The Central Bank of Nigeria anticipates a GDP growth of 4.17% in 2025, driven by reforms such as the removal of petrol subsidies and naira devaluation. Inflation, currently at 34.8%, is expected to decline as these reforms take effect.

• Budgetary Measures: The 2025 budget sets an exchange rate benchmark at ₦1,500 per dollar, aiming to stabilize the currency and reduce inflation to 15% by year-end. The budget also allocates significant funds to defense, infrastructure, health, and education.
  

💡 Implications for Nigerians

The naira's depreciation affects various aspects of daily life:

• Increased Import Costs: The cost of imported goods, including essential items, is rising, leading to higher living expenses for Nigerians.

• Fuel Price Hikes: With the Dangote Refinery's shift to dollar transactions, fuel prices may increase, further straining household budgets.

• Debt Servicing Challenges: The government's rising debt burden, exacerbated by currency depreciation, may impact public services and infrastructure development.

As the naira continues to face pressures, Nigerians are urged to stay informed and adapt to the evolving economic landscape. The government's ongoing reforms aim to stabilize the currency and foster long-term growth, but their success will depend on effective implementation and global economic conditions.

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