Naira Recovers Slightly as CBN Fights Costly N13.9tn Currency Blow

Naira Recovers Slightly as CBN Fights Costly N13.9tn Currency Blow

Naira showed faint signs of strength on Monday, closing at N1,605 per dollar after days of turbulence that pushed it past the N1,600 threshold. Though the one-naira rise from Friday’s N1,606 may seem small, for millions watching Nigeria’s economy, it is a welcome pause in what has been a punishing slide.

The currency’s slight recovery came amid serious pressure on the Central Bank of Nigeria (CBN), which has been pouring efforts and billions into keeping the naira afloat. For the first quarter of 2025, traders in the Nigerian Foreign Exchange Market (NFEM) quoted the dollar as high as N1,611 and as low as N1,601.98.

But behind the numbers is a bigger struggle.

CBN recorded a staggering loss of N13.9 trillion in 2024—nearly double its N6.3 trillion loss from 2023. This drop in financial standing stems from the apex bank’s aggressive actions to repay overdue foreign exchange contracts and restructure debts in an attempt to manage Nigeria’s currency crisis.

In plain terms, the bank is bleeding money to keep the economy from sinking. Much of this money has gone into settling legacy transactions and reducing foreign exchange liabilities to restore investor trust.

In 2023, the CBN started publishing its financial records to encourage transparency. That same strategy continued into 2024, with disclosures revealing major foreign currency deals involving financial giants like JP Morgan and Goldman Sachs. These agreements helped inject cash into the system to support government revenue and stabilize the market.

But these efforts are also shining a spotlight on a tough question: how strong are Nigeria’s foreign reserves, really?

According to the CBN, as of December 2024, Nigeria’s net foreign currency position stood at $23 billion. By the end of April 2025, gross external reserves had climbed to $37.9 billion, marking the highest point in three weeks. But concerns remain about how long this can last, especially with global oil prices sliding.

Crude oil still drives Nigeria’s economy, and when prices fall, the naira suffers. That’s what happened in early May, when global oil prices tumbled due to geopolitical tensions and trade policies, particularly the sweeping tariffs introduced by former U.S. President Donald Trump.

CBN’s immediate response included adjusting the Customs exchange rate for cargo clearance at Nigerian ports to N1,601.681 per dollar. This move directly affects businesses and traders who import goods into Nigeria. When the exchange rate rises, so do the costs, which often trickle down to everyday consumers.

The apex bank has also turned to selling short-term high-yield securities. These instruments are used to mop up excess liquidity in the system and defend the value of the naira. But this strategy is expensive. In 2024 alone, Nigeria spent N4.5 trillion on liquidity management—triple the N1.5 trillion spent in 2023.

Since President Bola Tinubu launched sweeping forex reforms, the naira has lost about 71% of its value against the dollar. Supporters of these reforms argue that allowing the naira to float more freely will eventually attract foreign investment and end dollar shortages. Critics worry that the short-term pain may deepen poverty and discourage growth.

The CBN remains firm. It says it is committed to keeping the external sector stable. By doing this, it hopes Nigeria will meet its international obligations, boost confidence in the economy, and lay the groundwork for long-term growth.

But on the ground, families and businesses continue to feel the heat. With inflation high and the cost of goods rising, many are unsure how much more they can bear. Even a one-naira gain, like what happened on Monday, gives some hope—but it also reminds people how fragile things remain.

In these uncertain times, every naira counts.