The Nigerian naira extended its recent downward drift, closing the trading week at N1,398 per US dollar in the official market on Friday, March 6 its softest level since January 28, when it last settled around N1,394.
Central Bank of Nigeria (CBN) data showed the currency fluctuating between N1,404 and N1,398 during Friday’s session, with the simple average rate settling at N1,394.55. The close capped a mostly bearish week that saw limited dollar inflows and ongoing liquidity strains weigh on sentiment.
The naira opened the week at N1,376 on Monday before sliding to N1,390 on Tuesday. A brief respite came Wednesday with a modest gain to N1,382, but the recovery fizzled, leading to closes of N1,388 on Thursday and the fresh low on Friday.
This latest pullback builds on a broader softening trend since mid-February, when the currency traded as strong as N1,337. Analysts point to persistent foreign exchange supply constraints, speculative positioning, and a widening premium between official and parallel markets as key pressures. The parallel (street) market has hovered in the N1,395–N1,405 range in recent sessions, closely tracking official movements.
The weakness coincides with a firmer US dollar globally, bolstered by safe-haven flows amid escalating geopolitical risks in the Middle East, including the US-Iran tensions that have disrupted oil routes and lifted crude prices. The dollar index posted strong gains earlier in the week, adding headwinds for emerging market currencies like the naira.
Despite the slide, CBN officials remain optimistic about underlying fundamentals. Governor Olayemi Cardoso recently noted that net external reserves reached $34.80 billion by end-2025, with gross reserves hitting $50.45 billion in February 2026. The apex bank projects gross reserves could climb further to $51.04 billion this year, buoyed by stronger oil earnings, remittances, and policy measures to enhance FX liquidity.
Recent reforms, including efforts to improve transparency and inflows, have helped moderate extreme volatility compared to prior years. However, short-term pressures from limited dollar availability and global uncertainties continue to test the currency.
Market watchers say the naira’s trajectory will depend on sustained reserve build-up, oil price stability (currently around $84 for Brent amid supply concerns), and any fresh CBN interventions. For now, the week’s close at N1,398 highlights vulnerability to liquidity squeezes, even as broader external buffers strengthen.
As the new week begins, traders will monitor global risk appetite and domestic inflows for signs of stabilization or further drift.
