Naira Weakens to 1536/$ Despite CBN Efforts to Stabilize Market
The Nigerian naira continued its downward trend at the official market last week, depreciating by 1.25% to close at 1536.89/$ on Friday. Despite Central Bank of Nigeria (CBN) interventions, the currency faced mounting pressure due to forex supply challenges and stalled negotiations in the oil sector.
According to CBN data, the naira opened the week at 1,528.03/$, weakening from 1,517.93/$ in the previous session. It further slipped to 1,532.93/$ before briefly recovering midweek, only to drop again by Friday.
The depreciation coincided with reports that talks on the naira-for-crude deal between the Nigerian National Petroleum Corporation Limited (NNPCL) and local refineries had hit a deadlock. However, discussions are set to resume this week, with a possible contract extension on the table.
Dangote Petroleum Refinery’s decision to suspend petroleum product sales in naira added further pressure to the forex market. Industry experts warned that the shift to dollar transactions could drive up demand for foreign currency, making it harder for businesses and individuals to access dollars at competitive rates.
Despite CBN’s continued injection of forex into banks and Bureaux De Change, analysts believe these measures may offer only temporary relief. Structural reforms remain crucial to resolving Nigeria’s long-standing FX challenges.
“Looking ahead, we expect a volatile naira as forex demand intensifies. Speculators are still exploiting arbitrage opportunities, but the CBN is likely to sustain its weekly interventions,” said analysts at Cowry Assets Management Limited.
At the parallel market, the naira appreciated by 0.77%, gaining N12 against the dollar to close at N1,568/$. However, Afrinvest reported a closing rate of 1,565/$, predicting a stable outlook driven by continued CBN support.
Meanwhile, Nigeria’s foreign reserves dipped slightly by 0.06% from $38.37bn to $38.35bn as of Thursday, as the CBN defended the naira amid minimal forex inflows.
Analysts also pointed out that foreign investors remain cautious about Nigeria’s forex market, particularly due to concerns over oil revenue. With oil prices fluctuating, external shocks such as geopolitical tensions could further impact Nigeria’s forex reserves and the stability of the naira.
Last week, Brent crude oil rose 3.0% to approximately $85 per barrel, driven by fresh U.S. sanctions on Iran and OPEC+’s commitment to production cuts until June 2026. As Nigeria heavily relies on oil exports for forex inflows, these developments will play a key role in determining the naira’s performance in the near term.
