Nigeria's currency, the naira, experienced a marginal depreciation on Tuesday, August 26, 2025, in both the parallel (black) market and the official Nigerian Foreign Exchange Market (NFEM), according to data from the Central Bank of Nigeria (CBN) and parallel market sources. This comes just two days after the CBN issued a directive on August 25 mandating geo-tagging for Point of Sale (PoS) devices to combat fraud, highlighting ongoing efforts to stabilize the financial ecosystem amid persistent exchange rate pressures.
In the parallel market, where individuals and businesses often turn for foreign exchange due to limited official supply, the naira fell to N1,550 per dollar from N1,540 on Monday, August 25. This represents a N10 or approximately 0.65% depreciation, driven by steady demand from importers, students funding overseas education, and travelers, as reported by currency traders in Lagos and other hubs. The black market rates, which are unofficial and can vary by location, saw the dollar buying at N1,535 and selling at N1,550, underscoring the premium over official channels.
Similarly, in the regulated NFEM—Nigeria's official foreign exchange platform—the naira weakened to N1,537 per dollar from N1,536.99 the previous day, marking a one-kobo (0.0007%) decline. CBN data confirms this slight uptick in the exchange rate, reflecting the volume-weighted average rate for the day. The NFEM rate remains a key benchmark for authorized transactions, but access remains constrained for many, pushing more activity toward the parallel market.
As a result of these shifts, the spread between the parallel market and NFEM rates expanded to N13 per dollar, up from N3.01 on Monday. This widening gap, which indicates inefficiencies in forex distribution, could exacerbate inflationary pressures and increase costs for imported goods, affecting everything from fuel to consumer electronics. Economists note that such disparities often arise from limited dollar inflows, speculative hoarding, and Nigeria's heavy reliance on oil exports, which have been volatile amid global energy market fluctuations.
The Naira's recent performance aligns with a broader trend of relative stability in the 1,500-1,600 range per dollar since early 2025, bolstered by CBN reforms like the Electronic Foreign Exchange Matching System (EFEMS) introduced late last year. However, the currency has depreciated about 0.27% over the past month, though it has gained 3.52% year-over-year, per market trackers. External reserves stood at around $40.72 billion as of mid-August, providing some buffer, but analysts warn that sustained inflows from foreign portfolio investors and non-oil exports are crucial to narrowing the spread and preventing further weakening.
This development occurs against the backdrop of Nigeria's push toward a cashless economy, with the CBN's latest PoS geo-tagging mandate aiming to enhance transaction security and reduce fraud in digital payments. While the forex market remains sensitive to global oil prices, investor sentiment, and policy interventions, experts anticipate the naira to trade within a narrow band in the near term, provided liquidity improves. Businesses and consumers are advised to monitor official CBN rates for regulated dealings, as black market fluctuations could signal broader economic challenges ahead.