Macroeconomic Report & Economic Updates

The Exchange Rates data from the Central Bank of Nigeria (CBN) revealed that the Naira appreciated to ₦1,500.92 per US Dollar in the official market on September 10, 2025. This marked the highest appreciation of the Naira since March 5, 2025 (approximately 6 months ago), when it stood at ₦1,500.8 per US Dollar. This appreciation coincides with a rapid increase in Nigeria’s foreign reserves, which surged to a 44-month high of $41 billion on August 19, 2025. Since that date up until September 9, 2025, the country’s reserves have increased by 1.5% (approximately $0.6 billion). The continued growth in reserves is a clear indicator of enhanced economic stability and has played a significant role in the recent appreciation of the local currency. To achieve greater stability for the Naira, there is a need to boost foreign reserves by increasing both oil and non-oil receipts, as well as reducing the country’s overdependence on imports. Increasing oil receipts requires critical investments in infrastructure and effective measures to curb oil theft and vandalism. On the other hand, boosting non-oil receipts depends on strong export promotion strategies, such as providing tax incentives for exporters, improving key infrastructure (ports, electricity, and transportation), and digitising trade processes to enhance efficiency

The growth in the Nigerian private sector continued to gain momentum, although at a slow pace. The August index was above the 50.0 benchmark, recording a 0.2 point increase from the value recorded for the month of July and pointing to a solid strengthening of business conditions. This occurred as a result of improved demand, reduced inflationary pressures and an increase in firm output. 

The Organisation of Petroleum Exporting Countries (OPEC) July 2025 Monthly Oil Market report showed a 3.58% increase in Nigeria’s average daily crude oil production, rising from 1.453 million barrels per day (bpd) in May to 1.505 million bpd in June, based on direct communication data. Despite this improvement, Nigeria’s output remains significantly below its ambitious 2025 target of 2.06 million bpd, falliing short by nearly 27%. This gap shows ongoing systemic challenges undermining the country’s oil sector, including underinvestment and oil theft, which continue to suppress production capacity. Although the Nigerian government does not influence oil price fluctuations, as they are determined in the global market, it retains some control over domestic production levels. Hence, to scale up oil production, the government must strengthen enforcement against oil theft by imposing stricter penalties, improving security, and fostering enhanced collaboration with affected local communities. Furthermore, attracting new investment requires a more stable macroeconomic environment, which can be achieved through numerous measures, including stable exchange rate management. These measures can boost investments, facilitate the modernisation of Nigeria's oil infrastructure, improve operational efficiency, and help the country realise its full production potential in the oil sector.

In the week ending August 29, 2025, the Nigerian Exchange Group (NGX) reported that the NGX All-Share Index (ASI) depreciated by 0.50% to close at 140,295.50 points, while market capitalisation fell by 0.49% to ₦88.769 trillion. The decline reflects cautious investor sentiment amid persistent macroeconomic uncertainties, particularly inflationary pressures, interest rate adjustments, and foreign exchange volatility. All sectoral indices closed lower, except the NGX AFR Dividend Yield Index, which appreciated by 0.94%, signalling investors’ preference for dividend-paying stocks. Meanwhile, the NGX ASeM Index closed flat, reflecting limited activity in the segment. The market’s bearish trend highlights risk aversion among investors, even as bargain-hunting in undervalued equities provided intermittent support. Looking ahead, performance will be shaped by upcoming corporate earnings, policy directions from monetary authorities, and macroeconomic data releases. Sustained volatility is expected, although dividend-focused and defensive stocks may continue to attract investor interest. The bearish performance reflects cautious investor sentiment amid persistent inflation, interest rate adjustments, and exchange rate volatility, which continue to dampen risk appetite. The preference for dividend-yielding equities suggests that investors are shifting toward defensive strategies in search of stability. To restore confidence and deepen participation, policy interventions should prioritise stabilising the foreign exchange market, ensuring consistency in monetary policy, and strengthening investor protection frameworks. Clear fiscal and structural reforms are also critical in reducing market volatility and attracting long-term capital inflows. 

The Movement in Foreign Reserves data from the Central Bank of Nigeria (CBN) revealed that the country’s foreign reserves rose to $41 billion on August 19, 2025, the highest level in 44 months. This is the highest amount recorded since December 3, 2021, marking a significant increase from the $37 billion to $39 billion range within which reserves fluctuated during the second and third quarters of the year. In its 301st Monetary Policy Committee (MPC) communique, the CBN noted continued stability in the foreign exchange market, citing factors such as higher capital inflows, improved oil production, rising non-oil exports, and reduced imports. The recent surge in reserves can also be attributed to these factors. The recent boost in reserves strengthened the country’s economic buffer, relieving pressure on the Naira and helping to restore market confidence. Despite these gains, significant risks remain that could slow the growth of the foreign reserve, such as declining inflows and high debt servicing costs. To sustain this upward trend, it is essential to maintain manageable debt levels and further enhance oil production through infrastructural investment. Futhermore, boosting non oil exports is critical and can be achieved by improving business access to credit, affordable electricity, transportation networks, and ensuring the availability of raw materials for production.