Dollar Strengthens: Naira Gains 0.18% Against US Dollar

7 May 2025 – The Nigerian Naira gained marginally against the US Dollar today, appreciating by 0.18% compared to the previous trading day. According to official data, the selling rate for the Dollar to Naira is now ₦1,606.46 per $1, down from ₦1,606.64 on 6 May 2025.

This slight gain reflects ongoing shifts in forex demand, supply constraints, and current monetary policies implemented by the Central Bank of Nigeria (CBN).

Today Market Rates – 7 May 2025

Dollar to Naira: ₦1,606.46 per $1
Euro to Naira: ₦1,819.80 per €1
Pound Sterling to Naira: ₦2,145.41 per £1
Chinese Yuan to Naira: ₦220.00 per ¥1

The exchange rate is heavily influenced by market dynamics, including foreign currency scarcity, policy decisions, and inflation. Due to limited access to official forex channels, many Nigerians rely on the parallel market, facilitated by Bureau de Change (BDC) operators, for their foreign currency needs.

For real-time rate updates, users are encouraged to check platforms such as Aboki Forex ,Central Bank of Nigeria (CBN) and Google Finance.

Naira Watch: Dollar Hits ₦1,607 despite reforms

Naira under pressure as dollar trades at ₦1,605 in black market today

Naira exchange rates : Dollar falls slightly, pound gains, euro slips — April 30

What Factors Affect Market Exchange Rates?

Despite recent efforts to unify exchange rates, significant gaps remain. These discrepancies stem from a range of structural, policy, and economic factors:

Limited Access to Official Forex

High Demand, Low Supply: Nigeria’s import-heavy economy fuels strong demand for foreign currencies, particularly the US Dollar.
Bureaucracy and Restrictions: Official forex acquisition often involves lengthy procedures and restrictions, pushing users toward the faster, less-regulated black market.

Distorted Official Exchange Mechanisms

Artificial Rate Management: Historically, the CBN maintained an official rate disconnected from actual market dynamics, leading to a flourishing parallel market.
Multiple Exchange Rate Windows: Legacy policies with different rates for various transactions created room for arbitrage and confusion, prolonging the gap between official and black-market rates.

Economic Pressures and Market Sentiment

Demand-Supply Imbalance: Shortages in official forex supply, combined with persistent demand, drive up parallel market rates.
High Inflation: Ongoing inflationary pressure devalues the Naira and prompts a shift toward more stable foreign currencies.
Uncertainty and Speculation: Fears of devaluation and political or economic instability push businesses and individuals to hedge with foreign currency, inflating demand.

Informality and Lack of Regulation of Black Market Exchange Rate

Willing Buyer, Willing Seller: The black market operates freely, allowing for rapid fluctuations based on real-time demand.
Regulatory Evasion: Some users turn to the parallel market to avoid official documentation, taxes, or limits on forex access.

Government Policies and Reforms

Monetary Policy: The CBN’s interest rate decisions and liquidity management directly affect the Naira’s performance.
Fiscal Policy: Government spending, borrowing, and deficits influence inflation and currency stability.
Forex Management Reforms: In 2025, the CBN introduced measures to increase dollar supply and allowed the Naira to float more freely in the Nigerian Foreign Exchange Market (NFEM). These reforms have helped narrow the official and black-market exchange rate gap.

Despite these improvements, Nigeria’s foreign exchange market remains highly sensitive to internal and external pressures. As such, the Naira’s future trajectory will depend on sustained policy consistency, improved forex inflows, and a stronger macroeconomic environment.