Naira Softens Against U.S. Dollar Despite FX Intervention
The naira closed at N1326 per US dollar at the official window following the Central Bank of Nigeria’s (CBN) FX intervention and a surge in external reserves.
The local currency posted mixed performance against the U.S. dollar across both the official and parallel foreign exchange markets.
In the official market, the naira depreciated by 0.40% week-on-week (WoW) to close at N1,326.52 at the Nigerian foreign exchange market (NFEM).
The local unit weakened despite $151 million FX intervention sales at the NFEM window, reflecting significant demand pressures that triggered dollar sales to banks.
In the parallel market, the naira rose to N1,370, leaving the gap between the official and informal segment rates at N44 at the close of the trading session on Friday.
The Apex Bank intervened amid rising external reserves, which analysts projected will keep the local currency stable ahead of the 2027 election dollar demand shock.
Nigeria’s external reserves increased by 0.52% week on week to US$54.41 billion, supported by accretion from across sources including remittances and inflows from foreign portfolio investors.
The market anticipates foreign reserves to continue to rise as global crude oil prices remain elevated.
Last week, crude oil prices extended their upward trajectory, reaching the highest levels since May, amid continued hostilities in the Gulf and diminishing prospects for a near-term resolution.
Brent crude was trading at $104.20 per barrel, while West Texas Intermediate (WTI) stood at $99.17 per barrel. Earlier in the week, Brent crude surpassed $108 per barrel, while WTI climbed above $103 per barrel.
Meanwhile, Bonny Light crude appreciated by 18.32% during the week, settling at $121.33 per barrel and further underscoring the strong upward momentum in the domestic crude oil benchmark.
The naira is expected to remain volatile in the near term, although rising external reserves and stronger oil prices are expected to provide some support.
