The Nigerian Naira faced renewed depreciation pressure across both official and parallel foreign exchange markets on Monday, as heightened seasonal demand from importers and retailers preparing for the festive period weighed on the local currency.
In the official Nigerian Foreign Exchange Market (NFEM), the Naira depreciated by 0.24 percent, closing at N1,455.38 per US dollar compared to N1,451.86 at the previous session. The currency also weakened against other major currencies, settling at N1,937.26 per British Pound and N1,692.76 per Euro, according to data published by the Central Bank of Nigeria (CBN).
The parallel market reflected a similar trend, with the US dollar trading as high as N1,489.56, a significant increase from the N1,473.60 rate reported the previous day. The British Pound and Euro traded at N1,991.69 and N1,743.01, respectively.
Market analysts attribute the pressure to a seasonal surge in dollar demand as businesses stockpile goods for Christmas and New Year sales. This cyclical demand often tests liquidity in the foreign exchange market.
Despite the immediate pressure, a potential stabilizing factor is anticipated. Analysts suggest the pressure could ease following expected interventions by the CBN, which is set to release new dollar sales to commercial banks. Market participants are closely watching for further policy signals from the monetary authority.
The downturn occurs against a backdrop of strong national external reserves, which provide a substantial buffer. Recent data indicates Nigeria’s external reserves have risen to $45.04 billion—the highest level since July 2019—bolstered by improved crude oil earnings, Eurobond proceeds, and multilateral financing inflows.
As the year draws to a close, the focus remains on whether the CBN’s interventions and the nation’s strengthened reserve position will be sufficient to steady the Naira against persistent seasonal headwinds and ensure stability heading into the new year.
