The naira ended the week on a softer note, depreciating by nearly 1% against the U.S. dollar in the official Nigerian Foreign Exchange Market (NFEM) to close at N1,456.72 per dollar on Friday, compared with N1,442.43 the previous week.
In the parallel market, the local currency also lost ground, trading between N1,470 and N1,475 per dollar by week’s end.
Market analysts attributed the decline to sustained strong dollar demand from importers and investors, which overwhelmed relatively modest foreign-exchange inflows.
“Throughout the week, the naira faced consistent pressure from elevated end-user and portfolio-related demand,” said AIICO Capital in its latest FX commentary. “Even with periodic Central Bank interventions, the imbalance between supply and demand pushed the rate lower.”
Cowry Asset Management noted that trading in the official window was unusually volatile, with the naira swinging between N1,440 and N1,460 before settling at the weaker level.
Reserves Rise Despite Currency Pressure
A bright spot amid the naira’s slide was continued growth in Nigeria’s external reserves. Central Bank data showed the buffers climbed from $43.64 billion on 14 November to $44.19 billion as of Thursday — a gain of more than half a billion dollars in just over a week.
Analysts linked the reserve build-up to steady crude oil earnings, improving non-oil exports, and a persistent trade surplus. “These factors have given the CBN additional firepower to smooth excessive volatility,” Cowry Asset said.
Outlook for the Coming Week
Most trading desks expect the naira to remain range-bound in the near term, with the trajectory heavily dependent on the pace of fresh dollar inflows.
Cowry Asset forecast a “cautious but steady” market, adding that any significant naira appreciation would require a marked improvement in supply rather than just the absence of speculative attacks.
AIICO Capital struck a more optimistic tone, projecting near-term stability supported by the rising reserves, while Afrinvest highlighted that six straight months of naira gains earlier in the year had helped anchor the ongoing disinflation process.
Analysts will also watch this week’s Monetary Policy Committee meeting closely. Afrinvest expects the recent suspension of proposed fuel import tariffs, combined with easing inflation and resilient GDP growth, to prompt a dovish shift, potentially a 25–50 basis point rate cut — a move that could further bolster fixed-income sentiment even as currency pressures linger.
For now, the naira’s ability to hold ground will hinge on whether the Central Bank can sustain the recent pace of reserve accretion against a backdrop of structural dollar shortages.
