The naira depreciated to ₦1,629 per dollar in the Nigerian Foreign Exchange Market (NFEM) on Monday, despite a substantial $668.8 million intervention by the Central Bank of Nigeria (CBN), marking a ₦29 drop from ₦1,600/$ recorded the previous Friday.
Data from the CBN showed that the domestic currency also weakened in the parallel market, dropping to ₦1,570/$ from ₦1,565/$ over the weekend. The widening gap between the NFEM and parallel market rates has now increased to ₦59, up from ₦35 last week, underscoring the persistent volatility in Nigeria’s foreign exchange landscape.
Financial market analysts have attributed the continued depreciation to strong demand pressures, particularly from foreign portfolio investors and local corporations.
Despite improved liquidity mid-month due to the apex bank’s interventions, demand continues to outpace supply. AIICO Capital, in its March macroeconomic report, noted that the naira depreciated by 2.97% month-on-month, closing March at ₦1,536.82/$ compared to ₦1,492.49/$ at the beginning of the month.
The Afrinvest Monthly Market Report similarly highlighted a parallel trend, with the naira dropping to ₦1,536/$ in the parallel market and ₦1,536.82/$ at the Nigerian Autonomous Foreign Exchange Market (NAFEM) window. The report also noted that the CBN’s efforts yielded only a slight appreciation of 0.5 basis points during the final week of March, while external reserves declined by approximately $110 million to $38.31 billion.
Outlook for the naira remains cautious, as analysts foresee continued CBN interventions to maintain liquidity and curb volatility. However, they also warned that global economic factors such as weakening oil prices, geopolitical tensions, and renewed trade tariff threats by the U.S. may trigger capital flight and further pressure the currency.
Last week, offshore demand surged after OPEC+ announced increased oil supply and following U.S. presidential candidate Donald Trump’s proposal of 50% tariffs, pushing the naira to as high as ₦1,570/$ before closing at ₦1,567.02/$ and foreign reserves falling by $149 million to $38.15 billion.
