Experts reveal why the naira keeps crashing in FX markets

• The naira has depreciated for the 2nd time to its lowest successful May arsenic caller demands flood the FX markets
• At the extremity of trading connected Tuesday, May 6, 2025, the naira depreciated, trading astatine N1,609 to the dollar from N1,605 the erstwhile day
• The naira’s autumn has been blamed connected respective factors, including a driblet successful lipid prices and outer reserves depreciation

Legit.ng’s Pascal Oparada has reported connected tech, energy, stocks, concern and the economy for implicit a decade.

The Nigerian currency has crashed against the US dollar for the 2nd time this week, amid renewed volatility successful the FX markets.

Experts person speculated further clang of the section currency amid planetary trends specified arsenic falling lipid prices and dwindling nationalist FX reserves.

The US dollar soars successful each FX markets successful Nigeria arsenic the naira crashes. Credit: Novartis
Source: Getty Images

The naira’s clang is blamed connected debased lipid prices

The naira’s continued illness has besides been blamed connected the sweeping commercialized tariffs imposed by the US President, Donald Trump.

Meanwhile, astatine the adjacent of trading connected Tuesday, May 6, 2025, the naira crashed to N1,609 to the dollar, from N1,605 the previous day.

The clang is the lowest successful May pursuing the assorted interventions by the Central Bank of Nigeria (CBN).

Currency dealers punctuation the dollar astatine a precocious of N1,609.50 and a debased of N1,603 per dollar, leaving an N6.50 margin.

The naira remains dependable successful the achromatic market

However, the naira has remained comparatively dependable successful the parallel market, trading astatine N1,610 per dollar since Friday, May 2, 2025.

Black marketplace traders disclosed that request for the US greenback has moderated but is expected to emergence amid the summertime holidays,

“We are going into a high-demand play owed to the coming summertime holidays. For now, demands are not truthful high,” Abbas Yishau, a achromatic marketplace operator, told Legit.ng.

CBN records a loss

The naira clang came arsenic CBN recorded a N13.9 trillion loss, astir $9 billion, arsenic it tried to settee overdue contracts, prune FX liabilities connected its equilibrium expanse and prevention the naira successful 2024.

The nonaccomplishment much than doubled from N6.3 trillion successful 2023 arsenic the apex slope redeemed bequest transactions to trim outstanding forex liabilities, lowering FX vulnerability and boosting reserves.

CBN records a nonaccomplishment trying to support the naira

In 2023, the slope published its finances to boost capitalist assurance and heighten transparency successful its affairs and overseas speech management.

According to reports, the improvement came arsenic the slope aims to region superior controls, alteration the naira to commercialized freely and lure inflows to extremity dollar scarcity.

The bank’s fiscal reports reportedly raised concerns astir the existent size of Nigeria’s outer reserves and the apex bank’s capableness to enactment the naira, arsenic it disclosed ample deals with JP Morgan and Goldman Sachs involving overseas currency contracts for currency to enactment the government’s revenue.

CBN settles debts to overseas banks

Bloomberg reported that the CBN said successful April that it has settled deals, including swaps and guardant contracts, to bring Nigeria’s nett overseas currency to $23 cardinal arsenic of December past year.

As of April 30, 2025, Nigeria’s gross outer reserves accrued to $37.9 billion, the highest successful 3 weeks.

The Nigerian currency, the naira, has mislaid astir 71% of its worth against the dollar since Bola Tinubu became president and embarked connected overseas currency reforms.

Naira trades debased successful the FX marketplace arsenic speculators currency out. Credit: Bloomberg/Contributor
Source: Getty Images

Reports accidental liquidity absorption costs from the merchantability of high-yielding short-tenured fixed income securities meant to mop up excess naira, power inflation, and the speech rate, accrued to N4.5 trillion successful 2024 from N1.5 trillion successful 2023.

CBN said it is committed to outer assemblage stableness to guarantee Nigeria is amended positioned to conscionable its planetary obligations, stabilise the naira, and boost macroeconomic confidence.

CBN adjusts Customs speech rates

Legit.ng earlier reported that CBN has adjusted the Customs speech rate for cargo clearance astatine Nigeria’s ports pursuing the naira’s depreciation against the dollar.

The apex slope is liable for fixing the speech rates astatine which importers wide goods from Nigeria’s aerial and seaports.

The Central Bank of Nigeria (CBN) has adjusted the Customs speech complaint for cargo clearance astatine Nigeria’s ports pursuing the naira’s depreciation against the dollar. The apex slope is liable for fixing the speech rates astatine which importers wide goods from Nigeria’s aerial and seaports.

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Source: Legit.ng