The Nigerian naira continues to face significant depreciation as the Central Bank of Nigeria (CBN) appears to prioritise the nation’s external reserves over maintaining the local currency’s value. In a notable policy shift, the CBN, which previously argued that the naira was undervalued, has reportedly begun selling U.S. dollars to banks at around ₦1,640 per dollar.
This indicates a new valuation range between ₦1,600 and ₦1,700 per dollar as the CBN seemingly attempts to establish an acceptable range in foreign exchange (FX) rates.
At the close of the week, the naira weakened further, ending at ₦1,678.87 per dollar in the official market, with the CBN selling foreign exchange at increasingly higher rates during recent auctions. The latest data from the FMDQ Exchange trading platform revealed a notable drop of ₦39.37 in a single session, reflecting a 2.4% depreciation from the previous day’s rate of ₦1,639.50.
Increased demand for U.S. dollars has been met with a supply shortage, leading to a significant increase in total daily FX turnover to $1,403.76 million on Friday, up from $244.96 million on Thursday. Within the Investors’ and Exporters’ (I&E) window, the naira fluctuated between ₦1,698.50 and ₦1,609.00 to the dollar, reflecting ongoing volatility.
Despite slight improvement in U.S. dollar liquidity in the autonomous FX market, demand pressures persist in the interbank sector. Spot FX rates for eligible users ranged from ₦1,591.60 to ₦1,705.00 per dollar, and a limited CBN intervention, selling approximately $51 million at ₦1,640 – did little to stem the currency’s decline. By week’s end, the naira had depreciated by 0.73%, closing at ₦1,678.87 in the Nigerian Autonomous Foreign Exchange Market (NAFEM) window.
The weakening naira has further dampened its performance among African currencies, with historical exchange rate advantages in markets like Benin Republic and Ghana eroding as the CBN grapples with economic pressures and rising FX demand.
External Market Movements: Oil Prices and Economic Stimuli
In the global commodities market, oil prices saw fluctuations with Brent crude and West Texas Intermediate (WTI) set to finish the week 2% higher, despite a recent drop. Investor concerns over Hurricane Rafael’s potential impact on U.S. Gulf infrastructure subsided, while China’s introduction of new economic stimuli added to market movement. Brent crude hovered around $73.90 per barrel, while WTI traded at $70.40.
Meanwhile, gold prices fell to $2,695.20 per ounce, marking the steepest weekly decline in over five months as investors reevaluated economic strategies.
The continued depreciation of the naira underlines Nigeria’s ongoing economic challenges as the CBN seeks to balance foreign reserves with the urgent need for currency stabilisation.
 appears to prioritise the nation’s external reserves over maintaining the local currency’s value. In a notable policy shift, the CBN, which previously argued that the naira was undervalued, has reportedly begun selling U.S. dollars to banks at around ₦1,640 per dollar.){kind=link}