The naira weakens slightly against the dollar in the parallel market amid forex liquidity concerns.
The Nigerian Naira depreciated marginally against the United States Dollar in the parallel market on Tuesday, August 5, 2025, amid persistent concerns over foreign exchange liquidity and rising demand from importers and travellers.
TJ News Nigeria reports that the dollar-to-naira exchange rate hovered around N1,570/$1 at major black market hubs in Lagos and Abuja, weakening from the N1,560/$1 average recorded the previous weekend. This minor drop reflects ongoing volatility in the informal forex market despite efforts by the Central Bank of Nigeria (CBN) to stabilise the exchange rate through monetary tightening and reforms.
Key Exchange Rate Highlights – August 5, 2025
- Black Market (Parallel Market): N1,570/$1 (sell), N1,560/$1 (buy)
- CBN Official Rate: N1,505.35/$1 (unchanged from Monday)
- Peer-to-Peer (P2P) Crypto Market: N1,580/$1 (varies slightly by platform)
- Bureau de Change Operators: Average sell rate between N1,565 and N1,575/$1
- Dollar Demand Level: High, driven by business transactions and the summer travel season
What Is Driving the Exchange Rate Fluctuations?
Several economic factors continue to exert pressure on the Naira, including:
- Limited Dollar Supply: Despite increased oil prices, Nigeria’s FX reserves remain under pressure due to subsidy payments, debt servicing, and repatriation of profits by multinationals.
- Speculative Demand: Traders in the parallel market are hoarding dollars in anticipation of further devaluation, which worsens scarcity.
- Delayed FX Reforms: While the CBN has introduced several reforms to unify the exchange rate and attract foreign investors, the implementation pace remains slow, limiting investor confidence.
- Increased Demand from Importers and Students: With universities abroad resuming academic sessions, demand for Form A and Form Q FX transactions has surged, adding pressure to available supply.
CBN’s Position and Response
The Central Bank of Nigeria maintained the official exchange rate at N1,505.35/$1 on its Investor & Exporter (I&E) FX window. The apex bank has reiterated its commitment to defending the Naira through strategic interventions and by tightening monetary policy to kerb inflation, which stood at 33.95% in July 2025, according to the National Bureau of Statistics.
Meanwhile, efforts to boost non-oil exports and remittances are ongoing, with the CBN encouraging diaspora Nigerians to remit funds through official channels rather than informal agents.
Advice for Forex Buyers and Sellers
- For Individuals/Students: Use official channels like Form A for school fees and medical payments. Avoid the black market unless urgent.
- For Businesses: Monitor the I&E window for opportunities to access dollars at official rates. Work with licenced banks and FX dealers.
- For Travellers: Early planning is key. Book tickets and accommodation in advance to reduce exposure to rate hikes.
Outlook for the Naira
Market analysts project that the naira will likely remain under pressure in the near term, especially if demand for the dollar continues to outpace supply. However, if crude oil prices remain strong and the government accelerates fiscal reforms, some relief may be expected by Q4 2025. Investors should also keep an eye on geopolitical developments, as these can significantly impact currency stability. Staying informed about market trends will be crucial for making wise financial decisions in the coming months.
Quick Summary
Market Type Exchange Rate (₦ / $) Parallel Market (Sell): ₦1,570 Parallel Market (Buy): ₦1,560 CBN Official Rate: ₦1,505.35 P2P Crypto Platforms: ₦1,580
