The naira closed the trading week on a soft note, depreciating across both official and parallel markets amid persistent supply constraints and elevated demand for foreign exchange, according to market analysts and data from the Central Bank of Nigeria.
In the Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira settled at N1,421.63 per dollar on Friday down N3.68 (or 26 basis points) from the previous week’s close of N1,417.94. The week-on-week decline reflected weaker dollar inflows relative to demand, with trading oscillating in a narrow but volatile band throughout the period.
AIICO Capital, in its weekly FX report, described the session as “a rollercoaster within tight ranges,” driven by “supply-demand imbalances that shaped movement at the NAFEM.” The naira opened the week under pressure, dropping 16 basis points on Monday as demand outstripped available liquidity. Tuesday offered a brief respite with a modest 7-basis-point recovery, keeping rates between N1,418 and N1,423 for much of the early week. However, supply weakness resurfaced later, pulling the currency lower by the close.
In the parallel market, the naira followed a similar trajectory, weakening to N1,487 per dollar — a 0.72% depreciation week-on-week, Cowry Assets Management noted. The widening premium between official and street rates continues to signal structural FX challenges, including limited access to official windows for many end-users.
Despite the naira’s retreat, Nigeria’s external reserves provided a supportive backdrop, rising by $111.17 million during the week to reach $46.01 billion. The steady accretion — driven by oil receipts, diaspora remittances, and selective portfolio inflows — helped cushion short-term pressures and bolster confidence in the CBN’s ability to intervene when needed.
Analysts from both AIICO Capital and Cowry Assets attributed the week’s depreciation to ongoing demand pressures from corporate obligations, import payments, and seasonal FX needs, compounded by inconsistent supply. Cowry Assets highlighted that “structural FX imbalances” remain a key drag, while AIICO pointed to “weaker supply levels” as the primary driver of the late-week slide.
Looking forward, the outlook remains cautiously range-bound. AIICO Capital expects the naira to trade within similar bands in the near term, supported by steady inflows and continued reserve build-up, unless there is a significant shift in dollar availability. Cowry Assets echoed this view, noting that rising reserves could provide stability, though persistent demand-side pressures may keep the currency under mild downward bias.
For businesses and households reliant on foreign exchange, the week’s movement serves as a reminder of Nigeria’s fragile FX equilibrium: modest gains can quickly reverse when supply fails to keep pace with demand. With reserves now comfortably above $46 billion, the CBN retains room to manage volatility — but sustained stability will depend on consistent inflows and disciplined liquidity management in the weeks ahead.
