Why Is the Naira Always Falling and What Can I Do?

The naira, Nigeria’s national currency, has been on a persistent downward spiral for years. From being at par with the US dollar in the 1980s, the naira now exchanges at hundreds of naira to a single dollar.

As of June 4, 2025, the exchange rates between the US Dollar (USD) and the Nigerian Naira (NGN) are as follows:

🏦 Official Exchange Rate

• 1 USD = ₦1,579.64
• This rate is based on data from Forbes Advisor as of 13:30 UTC on June 4, 2025. (forbes.com)

💱 Black Market (Parallel Market) Rate

• 1 USD = ₦1,615
• Reported by Osun Defender on June 4, 2025. 

This decline has become a source of frustration for citizens, investors, and businesses alike. But why is the naira always falling, and more importantly, what can you do about it?

This article explores the reasons behind the naira's consistent devaluation and provides practical strategies for individuals and businesses to navigate the turbulent waters of currency depreciation.

Why Is the Naira Always Falling?

There’s no single reason for the naira’s fall. Rather, it’s a cocktail of interconnected economic, structural, and political factors. Here are the key ones:

1. Overdependence on Oil Exports

Nigeria’s economy is heavily reliant on crude oil exports, which account for over 90% of foreign exchange (forex) earnings. When oil prices crash or production declines (due to pipeline vandalism or OPEC quotas), Nigeria earns less forex, leading to a scarcity of dollars and increased pressure on the naira.

2. High Demand for Dollars

From international school fees to medical tourism and importation of goods, Nigerians have a high demand for foreign currency. Unfortunately, this demand far outweighs the supply, creating an imbalance that weakens the naira.

3. Import-Dependent Economy

Nigeria imports everything from rice and clothes to electronics and machinery. This import dependency increases demand for dollars, as most of these goods are paid for in foreign currency. The more naira converted to dollars, the weaker the naira becomes.

4. Foreign Investor Exit and Low Confidence

Political instability, lack of consistent policy, and insecurity often drive away foreign investors. When investors withdraw their capital, they sell naira to buy dollars, putting more pressure on the currency.

5. Monetary Policy Challenges

Inconsistent forex policies, poor management of reserves, and issues with the Central Bank of Nigeria (CBN)’s interventions have also contributed to naira volatility. At times, artificial exchange rates and restrictions on forex access have created parallel (black) markets that trade at much higher rates than official ones.

6. Inflation and Fiscal Deficits

High inflation reduces the value of the naira internally, while excessive government borrowing and budget deficits further destabilize the macroeconomic environment.

What Can I Do About It?

While individuals cannot control macroeconomic policies, there are proactive steps you can take to protect your finances and reduce the impact of a weakening naira.

1. Diversify Your Income Sources

The best way to shield yourself from a falling naira is to earn in foreign currencies. This could include:

• Freelancing on platforms like Upwork, Fiverr, or Toptal.
• Remote jobs for international companies.
• Selling digital products to global audiences.
• Affiliate marketing or running a YouTube channel monetized in dollars.

2. Invest in Dollar-Denominated Assets

You can invest in assets that are priced in or generate returns in foreign currencies. Examples include:

• Eurobonds
• Mutual funds or ETFs focused on foreign markets
• Foreign real estate
• Cryptocurrencies and stablecoins (with caution)

This protects the real value of your savings against naira depreciation.

3. Use Fintech Platforms for International Payments

Fintechs like Payoneer, Grey, Chipper Cash, and Geegpay allow Nigerians to receive foreign currency payments and hold balances in USD, EUR, or GBP. This is a better alternative to receiving money directly in naira at poor exchange rates.

4. Reduce Dependency on Imported Goods

Consciously buying locally made alternatives not only supports the economy but also reduces personal exposure to currency volatility. Small lifestyle changes like buying Nigerian rice or fashion can go a long way.

5. Save and Budget in Hard Currency

You can create a multi-currency budget, especially for long-term goals like school fees, rent, or travel. By saving in dollars or euros, you avoid waking up to currency shocks that erode the value of your naira savings.

6. Stay Financially Informed

The currency market is volatile. Staying updated through reliable financial news outlets or blogs helps you make timely decisions — such as converting naira to dollars before major devaluations or avoiding panic-selling during market dips.

Government Reforms: A Ray of Hope?

While personal strategies are crucial, lasting change must come from government reforms. For the naira to stabilize or regain strength, Nigeria must:

• Diversify exports beyond oil (e.g., into agriculture, tech, and manufacturing)
• Attract and retain foreign investments
• Build trust in financial institutions
• Strengthen monetary and fiscal policy coordination
• Improve infrastructure to support local production

Until these changes materialize, Nigerians must take responsibility for safeguarding their finances against currency volatility.

Final Thoughts

The falling naira is not just an economic issue — it affects everyday Nigerians by increasing the cost of living, eroding savings, and limiting access to opportunities. While we cannot control the macroeconomic levers, we can take strategic steps to earn in stronger currencies, invest wisely, and plan proactively.

The world is increasingly borderless, and with the right knowledge and tools, you can build a resilient financial future, regardless of the naira’s value.

🏦 Official Exchange Rate

• 1 USD = ₦1,579.64
• This rate is based on data from Forbes Advisor as of 13:30 UTC on June 4, 2025. (forbes.com)

💱 Black Market (Parallel Market) Rate

• 1 USD = ₦1,615
• Reported by Osun Defender on June 4, 2025.
• 1 USD = ₦1,620 (selling) / ₦1,595 (buying)
• Reported by Naija News on June 4, 2025, reflecting rates from Lagos Bureau De Change operators.

📊 Recent Trends

• The official exchange rate has shown slight fluctuations over recent days, with rates ranging from ₦1,574.23 to ₦1,604.16 between May 28 and June 3, 2025. (wise.com)
• The black market rates continue to be higher than the official rates, indicating ongoing demand for USD in the parallel market

Note

The Central Bank of Nigeria (CBN) does not recognize the parallel market and advises individuals to conduct foreign exchange transactions through official banking channels.

If you need assistance with currency conversion or further information on exchange rates, feel free to ask!

Disclaimer:

This article is for educational and informational purposes only and does not constitute financial advice. Always consult a licensed financial advisor or professional before making investment decisions.