The naira ended the week weaker, sliding by 0.98 per cent at the official window to close at N1,456.72/$1 as persistent dollar demand met softer foreign inflows and structural challenges in the currency market.
Over the week, the local currency fluctuated within a wider trading band, ranging between N1,440 and N1,460, reflecting heightened volatility in the foreign exchange market.
Parallel market activity mirrored the trend, with the naira easing slightly by 0.2 per cent to about N1,475 per dollar, underscoring the enduring pressures on price discovery and the imbalance between supply and demand across the FX market.
Analysts argued that the weakness in the naira is symptomatic of underlying structural inefficiencies that have long constrained liquidity, even as the Central Bank of Nigeria (CBN) continues to intervene in the market.
The combination of subdued inflows and robust dollar demand from importers and corporate entities kept pressure on the naira, with midweek sessions particularly volatile as market participants recalibrated positions in anticipation of further macroeconomic developments.
Despite the currency’s relative softness, Nigeria’s external buffers exhibited modest improvement, offering some support to overall market confidence.
Gross foreign reserves rose by 1.1 per cent week-on-week to $44.12 billion, up from $43.64 billion, bolstered by stable crude oil receipts, improved non-oil inflows, and a sustained trade surplus.
The development provided the CBN with additional leeway to manage liquidity conditions and cushion the currency against extreme swings, though structural gaps in supply persist.
Meanwhile, developments in global oil markets added another layer of complexity for Nigeria’s external position.
Midweek data revealed an unexpected increase in U.S. crude inventories, triggering a sharp pullback in oil prices across major benchmarks. West Texas Intermediate crude fell by 3.01 per cent to $58.91 per barrel, Brent crude declined by 2.91 per cent to $63, while Nigeria’s Bonny Light eased by 1.24 per cent to $64.28.
Analysts observed that the dip reflects renewed market sensitivity to oversupply risks and slower-than-expected global demand, amplifying
pressure on oil-exporting economies and, by extension, the naira.
Looking forward, the FX market is expected to remain cautious, with pricing likely to be shaped more by the steadiness and predictability of inflows than speculative trading. Investors and corporate participants are closely monitoring trends in remittances, foreign portfolio flows, and oil receipts, aware that any sharp deviation could exacerbate volatility.
