Naira Depreciates to N1,361 Ahead of Pre-Election FX Demand
The naira fell N30 or 2.17% to N1,361 per US dollar in the Nigerian Foreign Exchange Market (NFEM) as the market anticipates pre-election demand for hard currency will hit the exchange rate.
The sharp depreciation of the local currency signals that year-end and political demand for the US dollar could be taking shape, dragging the naira lower.
A slew of market analysts projected a sharp increase in dollar demand for political spending ahead of the 2027 election. Non-bank corporate FX demand is also expected to rise for year-end payments and imports.
According to the Central Bank of Nigeria (CBN), the spot FX rate closed at N1,361.8394 per US dollar, up from N1,332.2582 at the beginning of the week.
During the week, the naira lost value against the U.S. dollar in both the official and parallel foreign exchange markets. The naira depreciated to N1370 in the parallel market amid a surge in demand from informal-sector market participants.
Meanwhile, Nigeria’s external reserves increased marginally by 0.09% week on week to $55.14 billion, reflecting a slight improvement in the country’s external liquidity position.
In the global oil market, crude oil prices were poised to record significant weekly gains amid escalating geopolitical tensions in the Middle East.
Brent crude was on track for a weekly gain of about $6 per barrel, while West Texas Intermediate (WTI) posted a more modest gain, rising from around $99 per barrel on Monday to above $100 per barrel during the week.
Last week, Brent crude was trading at $116.00 per barrel, while WTI stood at $102.50 per barrel, as market participants closely monitored developments in the Middle East.
The global oil market closed on edge, with uncertainties pushing energy costs higher following Houthi attacks on Saudi Arabian infrastructure, including facilities operated by Saudi Aramco.
In contrast, Nigeria’s Bonny Light crude fell 1.98% to $123.97 per barrel, despite upward momentum in international benchmark prices.
Going forward, Cowry Asset Limited said the naira is expected to remain under pressure amid persistent foreign exchange demand and market uncertainty, although a modest increase in external reserves could support currency stability.
The investment firm expects crude oil prices may remain elevated amid escalating geopolitical tensions in the Middle East and potential supply disruptions.
However, fluctuations in international benchmark prices and movements in Bonny Light crude could influence Nigeria’s export earnings and foreign exchange inflows.
Nigerian Naira Softens Against US Dollar, Euro, British Pound
