Naira Slumps to ₦1,456.72/$ as Demand Pressures Mount Despite Reserve Gains
The naira weakened by 0.99 per cent to close at ₦1,456.72 per dollar at the official Nigerian Foreign Exchange Market (NAFEM) on Friday, slipping from ₦1,442.43/$ recorded the previous week.
The depreciation occurred amidst sustained demand pressure across both the official and parallel markets, despite consistent interventions by the Central Bank of Nigeria (CBN). At the parallel market, the local currency also traded weaker, exchanging within the range of ₦1,470/$ and ₦1,475/$.
According to Cowry Assets Management Limited, the naira fluctuated within a wider trading band of ₦1,440 and ₦1,460 at the official window during the week.
“The naira moved within a noticeably wider trading band this week, fluctuating between N1,440 and N1,460 at the official window as softer inflows met firmer dollar demand,” the firm stated in its weekly report.
AIICO Capital corroborated this trend, noting that the market was “pressured by strong early demand from investors seeking to cover positions,” which pushed the exchange rate weaker despite CBN’s efforts.
Ironically, the naira’s depreciation comes at a time when Nigeria’s external reserves are witnessing a steady accretion. Data from the CBN indicates that the foreign reserves grew by 1.26 per cent within days, moving from $43.64 billion on November 14 to $44.19 billion as of Thursday.
Analysts at Cowry Assets attributed this growth to “stable oil receipts, stronger non-oil inflows, and a sustained trade surplus,” which have helped reinforce the CBN’s macro-liquidity efforts.
Analysts Project Cautious Stability
Looking ahead, market watchers expect the foreign exchange market to maintain a “cautious but steady posture. Cowry Assets Management projected that pricing will likely be shaped by supply dynamics rather than speculative behavior.
“The FX market is likely to maintain a cautious but steady posture, moving in line with the strength and consistency of inflows rather than speculative behaviour,” the firm noted.
Similarly, AIICO Capital maintained a positive outlook, stating, “The naira is expected to remain stable in the near term amidst growing external reserves”.
Afrinvest analysts linked the recent relative stability of the currency to the country’s disinflation trend, noting that it has played a “significant role.” They, however, warned that sustaining this stability would depend on effective management of Foreign Portfolio Investment (FPI) sentiment.
With the Monetary Policy Committee (MPC) meeting scheduled for this week, analysts at Afrinvest are projecting a “dovish call,” anticipating a modest 25–50 basis points rate cut supported by positive inflation dynamics and firm GDP growth expectations.
