Naira depreciates to ₦1,364/$ amid FX liquidity pressures

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By Boluwatife Oshadiya

Key Points

• Naira weakens 0.43% at official FX window
• FX liquidity improves but demand remains elevated
• External reserves decline to $48.45 billion
• Parallel market shows contrasting appreciation

Main Story

The Nigerian naira weakened against the US dollar on Monday at the official foreign exchange market, as persistent liquidity constraints and strong demand for foreign currency continued to pressure the local unit.

According to data from the Central Bank of Nigeria (CBN), the naira depreciated by 0.43% at the Nigerian Foreign Exchange Market (NFEM) to close at ₦1,364.24 per dollar.

Intraday trading reflected heightened volatility, with the currency touching a high of ₦1,371/$ and a low of ₦1,359.50/$, underscoring ongoing supply-demand imbalances driven by increased demand for international payments.

Interbank FX liquidity improved to $76.50 million across 79 deals, compared to $43.57 million recorded in the previous session, though analysts note that supply remains insufficient to meet market demand.

On a weekly basis, the naira depreciated by 1.10%, closing at ₦1,358.44/$ compared to ₦1,343.64/$ in the prior week, despite a brief midweek recovery.

In contrast, the parallel market recorded marginal gains, with the naira appreciating by 1.45% week-on-week to ₦1,380/$, before strengthening further to ₦1,375/$ in recent trades—highlighting continued divergence between official and informal market rates.

Nigeria’s external reserves declined to $48.45 billion, extending a downward trend attributed to reduced inflows and sustained interventions by the apex bank to stabilise the currency.

Analysts at AAG Capital and other market observers noted that foreign investors have increasingly adopted short-term positioning strategies in Nigeria, contributing to volatility in capital flows.

What’s Being Said

Market analysts suggest that persistent FX demand pressures, combined with declining reserves, could sustain depreciation risks.

“The current trajectory reflects structural liquidity challenges, despite periodic interventions by the central bank,” analysts noted.

What’s Next

Market watchers will track FX inflows, crude oil earnings, and monetary policy direction for signals on currency stability, especially as global commodity uncertainties persist.