By Boluwatife Oshadiya | May 19, 2026
Key Points
- Naira depreciated to N1,373.70/$ at the official market amid persistent FX demand
- Interbank FX turnover rose sharply to $76.29 million across 92 deals
- Analysts say weak liquidity and rising foreign payment obligations may keep pressure on the local currency
Main Story
The Nigerian naira weakened further against the United States dollar at the Nigerian Foreign Exchange Market (NFEM) on Monday as sustained demand for foreign exchange outweighed improved market liquidity.
Data released by the Central Bank of Nigeria (CBN) showed the local currency closed at N1,373.70/$, compared with N1,371/$ recorded at the close of trading last week, extending its recent losing streak at the official market.
The official trading window recorded transactions between an intraday high of N1,374.50/$ and a low of N1,370/$, reflecting continued volatility in the currency market as corporate and institutional demand for foreign payments remained elevated.
Interbank FX turnover climbed significantly to $76.296 million across 92 deals, up from $48.487 million recorded in the previous trading session, signalling improved activity in the market despite ongoing supply constraints.
At the parallel market, the naira also depreciated to around N1,390/$ as demand pressure persisted across informal currency trading channels.
Analysts said the local currency remains vulnerable to fluctuations in foreign exchange inflows despite recent efforts by monetary authorities to stabilise the market through policy reforms, tighter FX regulations, and increased market transparency.
Nigeria’s external reserves have recorded modest gains in recent weeks, supported partly by higher global crude oil prices and improved oil production levels. However, market participants say inflows remain insufficient to fully offset import-related demand and capital outflows.
“The naira is likely to remain under pressure in the near term as FX demand continues to outpace supply despite signs of improving market liquidity,” analysts at Cowry Asset Management Limited said in a market note.
The development comes as Nigeria’s crude oil production showed signs of recovery. According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), average daily crude oil production rose by 7.6% month-on-month to 1.49 million barrels per day in April 2026, the highest level recorded so far this year.
Total oil production, including condensates, increased to 1.66 million barrels per day from 1.55 million barrels per day in March, supported by reduced crude oil theft, improved pipeline operations, and stronger output from newly activated upstream assets.
The Issues
The naira’s continued weakness highlights the fragile balance within Nigeria’s foreign exchange market despite ongoing monetary reforms by the CBN. While improvements in oil production and higher crude prices typically support FX earnings, analysts say Nigeria’s forex inflow remains constrained by limited foreign investment inflows and persistent import dependence.
The widening gap between FX demand and supply continues to create pressure across both official and parallel markets. Rising foreign debt obligations, import payments, and demand from manufacturers and airlines have also intensified liquidity challenges.
Nigeria’s crude oil production recovery remains below the Federal Government’s 2026 production target of 2.06 million barrels per day, limiting the country’s ability to significantly boost foreign exchange earnings through oil exports.
What’s Being Said
“Higher crude oil prices are providing some support to Nigeria’s external position, but the gains remain vulnerable to geopolitical risks and market volatility,” Cowry Asset Management Limited stated.
“The sustained rebound in crude oil production reflects improved operational stability and reduced pipeline vandalism across key terminals,” the Nigerian Upstream Petroleum Regulatory Commission said in its April 2026 Oil Production Status Report.
Independent market analysts also warned that without stronger autonomous FX inflows and sustained investor confidence, the naira could continue trading within a volatile range in the coming months.
What’s Next
- Investors and market participants will monitor upcoming CBN interventions and liquidity management measures in the FX market
- Oil market performance and Nigeria’s crude production levels are expected to remain key drivers of external reserve growth
- Analysts expect the naira to trade within a weak but relatively stable range unless foreign capital inflows improve significantly
Bottom Line
The Bottom Line: Nigeria’s improving oil production offers some support for the naira, but structural FX liquidity challenges continue to outweigh those gains. Until foreign exchange inflows strengthen meaningfully and market confidence improves, pressure on the local currency is likely to persist across both official and parallel markets.
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