The Nigerian naira remains under pressure against the U.S. dollar as rising demand for foreign currency continues to impact exchange rates across different forex markets.
After closing at N1,580 on Wednesday, the naira shed N20 in a single day and is currently trading at N1,600 per dollar on the parallel market as of this morning. The Central Bank of Nigeria (CBN) has intervened, but the official currency rate has also declined, dropping to N1,538 per dollar.
Just last month, the naira experienced a brief rally, appreciating by 2.5%, with the exchange rate dipping below N1,500 per dollar. However, analysts say this rebound has now reversed due to increased foreign exchange demand.
According to financial experts, two key factors have contributed to the naira’s recent decline:
Foreign investors withdrawing funds – Many investors have moved their money overseas, leading to higher demand for U.S. dollars.
CBN’s recent debt service payments – The government’s obligations in foreign currencies have led to additional dollar outflows.
Another critical issue is the limited supply of U.S. dollars. The CBN has halted direct sales of foreign currency to commercial banks, which has further tightened liquidity in the forex market. Although Bureau de Change operators are still buying $25,000 per week from banks, this has not been enough to stabilize the naira’s value.
Market analysts believe that while the naira might experience a temporary pause in depreciation, long-term stability will require significant policy changes. The government needs to implement structural economic reforms and increase foreign earnings to reduce reliance on imported goods and stabilize the currency.
Experts caution that the naira may depreciate even further and soon surpass N1,600 per dollar if the CBN doesn’t take further action or if dollar inflows don’t grow.
