Naira Falls as Market Anticipates Debit Cards Will Fuel FX Demand
The Nigerian naira fell against the US dollar in the foreign exchange market (forex) on Tuesday as demand overwhelmed the supply side for the first time in weeks. The Central Bank of Nigeria (CBN) quoted the official rate at N1529.22 per dollar, representing a moderate depreciation from N1528.33 the previous day.
A growing number of analysts have said the reactivation of naira debit cards for cross-border payments will fuel demand for foreign currencies, especially the dollar. A slew of investment banking analysts said they hope the authority can accommodate the expected surge in US dollars from wider numbers of people.
“On the other hand, the reintroduction of the naira debit card could take away demand from the black market and eliminate excess spread charges by the black market operators,” an investment banker said in a chat with MarketForces Africa.
Recall that Nigerian banks have reactivated the use of naira debit cards for international transactions and online payments, more than three years after financial institutions suspended the service due to acute dollar shortages.
The move by the deposit money banks signals improved dollar availability in the economy, but details from the CBN platform showed external reserves have continued to hover at $37 billion.
Some banks have given their customers the opportunity to use their debit cards to settle international payments totaling $500 per month, up from $100 per month before it was cancelled. In a midyear report, analysts at investment firm Anchoria Limited estimated the fair value of the naira to settle at N1700 per dollar in 2025.
The firm said Nigeria’s openness to global financial markets leaves the naira vulnerable to external shocks. However, the firm noted that measures by the CBN including foreign exchange market reforms and enhanced transparency—have helped cushion volatility during the first half of 2025.
“Combined with improved FX reserve buffers, these steps mitigated potential depreciation pressures that could have pushed the naira past N1,700 per dollar”, the firm said. The local currency enjoyed stability in the first half, supported by increased FX inflows to the retail segment—partly due to the CBN’s move to allow Bureau de Change (BDC) operators access to official FX channels.
This narrowed spread between the official and parallel market rates, averaging 2.6% from the beginning of the year to June. Analysts said they expect the naira to maintain its upward momentum, supported by a softer dollar on the global stage—driven by rising oil prices and the escalating tensions in the Middle East.
With Nigeria’s external reserves gradually strengthening and policy signals turning more market-friendly, confidence in the local currency is steadily improving, Cowry Asset Limited said in a note. #Naira Falls as Market Anticipates Debit Cards Will Fuel FX Demand High Short-term Debt: GCR Downgrades Mecure Industries Rating
