The Nigerian naira depreciated slightly against the US dollar on Monday, closing at ₦1,457.51 per dollar at the official foreign exchange (FX) market, representing a 0.16% decline from Friday’s rate.
The downward movement in the local currency came as dollar demand outpaced supply across trading platforms, reflecting renewed pressure in the FX market. Analysts attributed the slide to limited dollar liquidity despite earlier signs of stability last week.
Market data showed that the naira had earlier strengthened on the back of improved foreign inflows, with the local unit closing at ₦1,455.17/$ on Friday. That performance was largely supported by a combination of increased remittances, stronger oil receipts, and portfolio inflows that helped ease demand pressure.
Meanwhile, the Central Bank of Nigeria (CBN) reported an uptick in the nation’s external reserves, which rose to $42.589 billion. The growth in reserves has been attributed to sustained CBN interventions, robust oil export revenues, and rising foreign investments in Nigerian financial instruments.
Market observers believe the recent reserve build-up provides the apex bank with more leverage to manage short-term exchange rate volatility and maintain stability in the FX market over the coming weeks.
However, the commodities market showed weakness on Monday as crude oil prices slid following the Israel–Hamas ceasefire, which eased geopolitical risks and removed the conflict-driven risk premium from the market.
Brent crude futures settled at $64.90 per barrel, while West Texas Intermediate (WTI) dropped to $61.28 per barrel amid growing concerns of oversupply, especially with the Organization of the Petroleum Exporting Countries (OPEC) gradually rolling back production cuts.
Nigeria’s Bonny Light crude also fell by 4.66%, closing at $69.94 per barrel. Analysts have warned that sustained low oil prices could exert fiscal pressure on the government and reduce foreign exchange earnings, which remain critical to the stability of the naira.
In the near term, financial experts expect the naira to remain relatively stable, buoyed by steady FX inflows and CBN’s continued market interventions. Nonetheless, they cautioned that increasing import demand or weaker foreign inflows could slow the currency’s recovery momentum.
While oil prices may remain subdued due to elevated supply levels, a rebound in global demand could provide some relief for Nigeria’s external accounts and support confidence in the domestic currency. Still, volatility in the international oil market may keep investors on edge in the coming weeks.
