The Nigerian naira weakened in the official foreign exchange market for the third consecutive trading session, closing at N1,353.90 per US dollar on Wednesday, March 18, 2026 the final trading day before the Eid al-Fitr holiday reflecting a 0.7% depreciation from Tuesday’s N1,344.42.
According to Central Bank of Nigeria (CBN) data released on March 19, 2026, external reserves declined for the fifth straight session, falling to $49.83 billion as of March 17 from $50.02 billion on March 11. The drop below the $50 billion threshold comes despite Brent crude prices surging 11.16% week-on-week to $101.16 per barrel, briefly touching $100 last week amid heightened geopolitical tensions in the Middle East.
The parallel market rate held steady at N1,400 per dollar, narrowing the premium over the official rate to N46.10 from N55.58 the previous day—a sign of gradual convergence between the two segments.
The CBN attributed the recent naira pressure to ongoing outflows linked to global uncertainties, including the escalation of the US-Israel conflict with Iran, which has introduced a significant risk premium into oil markets. Despite the short-term setback, the apex bank maintained an optimistic outlook in its 2026 macroeconomic framework, projecting external reserves to rebound to $51.04 billion by year-end. This forecast is underpinned by expected stronger oil receipts, continued foreign exchange reforms, and sustained external inflows.
Governor Olayemi Cardoso emphasised the CBN’s focus on transparency and liquidity enhancement. He pointed to the elimination of multiple exchange rate windows as a key reform that has improved trade and investment flows. Cardoso also highlighted Nigeria’s continued attractiveness for portfolio inflows due to relatively high domestic yields, which provide support for the currency.
The premium in the parallel market has narrowed dramatically from around 50% in 2022 to an average of under 2% in 2025—reflecting increased market liquidity and reduced dependence on direct central bank interventions.
While geopolitical risks and short-term reserve drawdowns pose challenges, analysts note that elevated oil prices offer a potential buffer. Sustained high crude levels could bolster foreign exchange earnings and help reverse the recent reserve decline, provided domestic production remains stable and global supply disruptions do not intensify.
Market participants will closely monitor oil price trends, geopolitical developments, and any fresh CBN liquidity measures for indications of the naira’s near-term trajectory.
