As at today Wednesday 7th May 2025, The Nigerian Naira continues to grapple with severe pressures against major global currencies, the rates today against the US Dollar (USD), British Pound Sterling (GBP), and Euro (EUR) as both official and parallel markets reflect the country’s deepening exchange rates oil and gas sector woes.
The persistent divergence in exchange rates underscores broader structural challenges. Nigeria, Africa’s largest oil producer, derives over 80% of its foreign exchange earnings from crude oil exports. Yet, declining global oil prices, underwhelming production levels, and sectoral inefficiencies have led to sustained FX instability.
Official Exchange Rates (NAFEM – 7 May 2025)
According to verified data from the Central Bank of Nigeria (CBN) and cross-referenced sources on TradingEconomics :
- USD/NGN: ₦1,606.71
- GBP/NGN: ₦1,938.11
- EUR/NGN: ₦1,615.81
These official rates remain relatively stable compared to previous days, buoyed by ongoing CBN interventions. The apex bank’s $197.71 million FX injection in April 2025 was a key effort to cushion the Naira. However, these gains remain limited amid sectoral vulnerabilities.
Parallel Market Rates (7 May 2025)
Unauthorised market rates, sourced from verified dealers depict a widening premium:
- USD/NGN: ₦1,715.00 (buying) | ₦1,725.00 (selling)
- GBP/NGN: ₦2,235.00 (buying) | ₦2,260.00 (selling)
- EUR/NGN: ₦1,825.00 (buying) | ₦1,850.00 (selling)
This 7–16% spread over official rates reflects escalating dollar demand in an import dependent economy, where FX shortages continue to drive speculative behaviour and informal market activity.
Oil and Gas Sector: The Crux of the Crisis
Nigeria’s FX instability is closely tied to its underperforming oil and gas sector. Key developments influencing currency movements include:
- Crude Oil Price Slump: Brent crude recently dipped below $60 per barrel, well beneath the $75 benchmark set for Nigeria’s 2025 budget. OPEC+’s production ramp-up has triggered global oversupply, weakening Nigeria’s fiscal buffer.
- Production Shortfalls: Nigeria currently averages under 1.3 million barrels per day (mbpd), far below its 1.78 mbpd projection. Theft, sabotage, and obsolete infrastructure remain major setbacks.
@FinPlanKaluAja1 noted that Nigeria’s output is now 700,000 bpd lower than in 2005, exacerbating the Naira’s decline. - Transparency Issues: A reported $2.9 billion is under scrutiny over suspected mismanagement, dampening investor confidence.
Abokifx.com and other observers cite this as a key reason for lagging foreign direct investment inflows. - Dangote Refinery Disruptions: Despite its promise, the refinery struggles to secure crude at Naira-denominated rates. With suppliers insisting on dollar payments, refined product prices remain high.
@drpenking observed that dollar-indexed feedstock costs are preventing pump price relief. - External Economic Shocks: New tariff threats from U.S. President Donald Trump have rattled financial markets. In early April 2025, the Naira crashed to ₦1,600/$1 at the official window, amid fears over disrupted exports.
Economic Implications
- FX Reserves Erosion: Nigeria’s dwindling oil earnings have weakened its ability to replenish foreign reserves. The CBN’s controversial $9 billion derivative settlement in Q1 2025 has further strained liquidity.
- Cost of Living Pressure: Elevated black market rates raise import bills, worsening inflation, particularly for fuel, food, and manufactured goods. Despite occasional Naira appreciation (e.g., ₦1,463.10 on 28 Feb. 2024)
As of 7 May 2025, the Naira’s exchange rate trajectory mirrors the turbulence within Nigeria’s oil dominated economy. With official rates at ₦1,606.71 (USD), ₦1,938.11 (GBP), and ₦1,615.81 (EUR), and significantly higher black market rates, the currency remains trapped between external shocks and internal inefficiencies.
The Naira’s recovery hinges on systemic reforms, reviving crude output, tackling corruption, and bolstering domestic refining capacity. Without these, even the most aggressive monetary interventions will struggle to contain volatility.
