Naira Falls Again as Nigeria Avoids Strong Local Currency
The Nigerian naira falls for the fourth consecutive trading session in the foreign exchange market, as the Central Bank’s large US dollar purchases signal a move to curb a strong local currency.
Some economic analysts told MarketForces Africa that a stronger naira will drive foreign portfolio investors away from the Nigerian financial market.
“A significant dollar amount has been brought into the economy to chase elevated yields in the fixed income, equities market – especially OMO bills. This hot money came in when the exchange rate hovered between N1450 and N1500
“With naira strengthening towards $1,300, foreign investors would rather stop loss, and exit their position, which would trigger high demand for dollars.
“The CBN appears to have learned from a similar experience in the first quarter of 2025 after U.S. tariffs stoked a move to a safe haven, and about $5 billion was used to defend the local currency, analysts explained, saying Nigeria may not actually be ready for a strong local currency.
Official rate weakened to N1349 per dollar on Monday after a report surfaced that the Apex Bank mopped up about $190 million from the local forex market last week.
Despite this, the Naira appreciated marginally by 0.68% week on week, closing at N1,346.32/US$1, compared to N1,355.42/US$1 the previous week.
The appreciation was largely supported by sustained foreign portfolio inflows during the period, according to Coronation Merchant Bank’s research subsidiary. The Naira traded stronger midweek, touching a high of N1,338.11/US$1, before moderating toward the weekend.
Total FX inflows for the week settled at US$648.2 million, driven predominantly by foreign participation. Foreign Portfolio Investors (FPIs) accounted for the largest share of inflows, contributing US$364.8 million or 56.3% of total inflows.
Exporters accounted for US$168.8 million, or 26.0% of the FX volume, while non-bank corporates contributed US$93.7 million (14.5%), Coronation said in its update. Individuals accounted for US$10.0mn (1.5%), and other sources (including FDIs and other corporates) contributed US$10.8mn (1.7%).
The investment firm said there was no FX inflow from the CBN. Instead, the Apex Bank kept the naira rally in check, mopping up $189.80 million, according to TrustBanc Financial Group. #Naira Falls Again as Nigeria Avoids Strong Local Currency Nigeria’s Big Banks Near N14trn MV in Stock Market
