Naira Drops Sharply Amidst Successive FX Reserves Outflow
The naira pulled back sharply against the US dollar at the Nigerian foreign exchange market (NFEM) as foreign reserves recorded its fifth outflow for international payments on Monday.
The local currency struggled to maintain its position amid surging US dollar demand in the global forex market, driven by increased demand for safer assets.
In its daily FX publication, the Central Bank of Nigeria (CBN) reported the naira spot rate at the official window had depreciated by N35 to N1388 per dollar.
The faster local currency depreciation signalled negative developments, in contrast to growing expectations that the FX rate would climb to N1300 in the first half of 2026.
The market had seen a sharp exchange rate bounce to N1344 per dollar last week, supported by the CBN’s FX interventions, exporters’ inflows, and foreign portfolio investors’ inflows. The supply side was also buoyed by additional FX inflows from non-bank corporates and individuals.
The Apex Bank slowed its FX intervention in the local forex market in the absence of pressure, only for it to surface in the latter part of last week’s trading session.
Despite high oil prices, Nigeria’s external reserves recorded a fifth outflow, in contrast to expectations that the Middle East war would provide an added advantage to ramp up FX receipts from hydrocarbon sales.
Foreign reserves settled at $49.786 billion, down from 2009 high of $50.027 billion, data from the CBN revealed. In summary, the naira weakened across both market segments on Monday, depreciating 2.48% to ₦1,388.38/$ at the NFEM window.
The exchange rate fell by 2.33% to ₦1,388/$ in the parallel market, reflecting broad-based selling pressure on the local currency in both the official and informal foreign exchange markets.
