Naira Depreciates as FX Inflow Hits 6-Month Low
The naira value declined sharply in the official window as data from the FMDQ platform revealed that inflows from foreign investors declined sharply in March to the lowest level in six months.
Last week, the naira briefly tested N1570 during an intraday trading session as rising demand from offshore interest clouded the amount of hard currency supplied. The exchange rate at the official window eventually settled at N1567 per greenback.
With the Central Bank of Nigeria for two out of the three days, the interbank Nigerian foreign exchange market witnessed heightened volatility this week. Early in the week, the naira exchange rate was relatively stable, trading between N1,525–N1,535/USD, buoyed by moderate offshore inflows.
However, midweek saw a sharp reversal as offshore demand surged, compounded by weakened oil prices following OPEC+’s supply hike and global risk-off sentiment driven by Trump’s tariff announcements, AIICO Capital Limited said in an update.
The investment firm said this led to strong FX demand pressure and limited supply, pushing the naira to as high as N1,570 per US dollar.
On Friday, the CBN intervened, selling a total of $197.7 million between N1,519 and N1,595.20 per US dollar. Despite this, the naira depreciated by 1.97% to close at N1,567.02.
Due to sustained FX interventions, Nigeria’s gross external reserves declined for the third consecutive week, down by $135.57 million week on week to $38.17 billion.
In the forwards market, exchange rates fell across contracts, according to Cordros Capital Limited. Analysts reported that the naira rate for a one-month contract was down by -2.8% to N1,619.49 per US dollar.
The 3-month forward contract fell by -3.4% to N1,689.27 per greenback, and the 6-month contract skid by 2.9% to N1,772.91, while the 1-year contract declined by 2.1% to N1,930.55.
The CBN is likely to maintain its robust defense of the Naira, as offshore demand intensifies against the dual pressures of declining global oil consumption and rising OPEC+ production, AIICO Capital Limited said. According to the data from FMDQ, total inflows into the Nigerian Foreign Exchange Market (NFEM) declined by 5.5% to $3.90 billion in March from $4.13 billion.
The FX market witnessed a substantial decrease in inflows from foreign sources, down by 61.9% month on month to USD787.20 million from USD2.07 billion—the lowest level in six months—due to erosion of market confidence following global trade uncertainties.
As a result, the foreign portfolio investors segment recorded lower accretion, while inflows from other corporates and foreign direct investment segments increased.
In March, inflows from local sources rose to a twenty-two-month high, rising by 51.0% month on month to $3.11 billion from $2.06 billion. The surge was driven by a 204.3% increase in inflows from the CBN, a 26.7% uptick from non-bank corporates.
The exporters and importers contribution to FX inflows climbed by +21.5%, but inflows from individuals declined by 43.7% in the period.
“In the short term, we expect that FX inflows will remain robust, driven by improved market confidence. However, the moderation in yields and global trade uncertainties are likely to dampen carry trade opportunities, restraining FX inflows from FPIs, ultimately affecting overall FX liquidity,” Cordros Capital Limited stated in its note.
In the global commodity market, oil prices plunged nearly 7% on Friday, reaching their lowest levels in over three years, as escalating U.S.-China trade tensions deepened global recession fears.
China, the world’s largest oil importer, announced a 34% tariff on all U.S. goods starting April 10, prompting fears of a prolonged economic slowdown. Brent crude fell $4.56, or 6.5%, to settle at $65.58 per barrel, while WTI dropped $4.96, or 7.4%, to $61.99. Both benchmarks touched four-year lows during the session.
For the week, Brent lost 10.9%—its sharpest drop in 18 months—while WTI fell 10.6%, the most in two years. Gold slumped 2.9% to $3,024.20 per ounce after investors sold off to cover broader market losses. #Naira Depreciates as FX Inflow Hits 6-Month Low FCMB Climbs as Investors Await Audited Results
