By Boluwatife Oshadiya | May 22, 2026, 7:05 PM
Key Points
- Naira weakened to ₦1,375.46/$ at the official market on Friday
- Interbank FX turnover declined more than 46% to $62.34 million
- Parallel market rate strengthened slightly to ₦1,380/$ amid tighter liquidity
Main Story
The naira depreciated against the United States dollar on Friday after foreign exchange demand outweighed supply at the Nigerian Foreign Exchange Market (NFEM), while interbank market turnover recorded a sharp decline.
Data released by the Central Bank of Nigeria showed the naira weakened by 0.23% to close at ₦1,375.46 per dollar, compared with ₦1,372.30/$ recorded in the previous trading session.
During intraday trading, the local currency traded between a high of ₦1,377.99/$ and a low of ₦1,374/$.
The currency had opened the week relatively stronger around ₦1,371/$ amid improving foreign reserve levels, but weakened gradually over the week due to the absence of significant FX intervention from the apex bank and rising demand pressures from importers and other eligible market participants.
CBN data also showed interbank FX turnover plunged by more than 46% to $62.34 million across 84 deals, down from $116.04 million recorded a day earlier, highlighting tighter dollar liquidity conditions in the market.
Meanwhile, the parallel market traded at around ₦1,380/$, reflecting divergent pricing dynamics between the official and informal foreign exchange markets.
Market analysts attributed the pressure on the naira to sustained demand for foreign currency by manufacturers, importers and offshore investors amid limited dollar inflows into the formal market.
Global crude oil prices also rebounded sharply following continued geopolitical tensions involving Iran and disruptions around the Strait of Hormuz, a key global oil shipping route. Higher oil prices typically improve Nigeria’s FX earnings outlook, although the impact is often delayed.
The Issues
Nigeria’s foreign exchange market remains under pressure despite recent reforms aimed at improving liquidity and price discovery. Although the CBN has introduced measures to unify exchange rates and attract foreign capital inflows, dollar supply shortages continue to create volatility in the market.
The sharp decline in interbank turnover also signals weaker market depth, suggesting that liquidity conditions remain fragile despite improvements in external reserves and higher crude oil prices.
Analysts say sustained FX stability will depend largely on stronger non-oil dollar inflows, increased investor confidence and consistent policy implementation by monetary authorities.
What’s Being Said
“The naira remains vulnerable to liquidity shocks because FX demand still significantly outweighs autonomous supply inflows,” said analysts at Cordros Securities.
“Oil price recovery may support reserves over time, but near-term currency stability will still depend heavily on sustained market liquidity and investor confidence,” said Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee.
What’s Next
- Investors will monitor future CBN interventions and FX policy adjustments aimed at improving market liquidity
- Market participants are expected to watch crude oil price movements closely due to their impact on Nigeria’s external reserves
- Upcoming foreign portfolio investment inflows and external reserve data could influence near-term exchange rate direction
The Bottom Line: The latest decline in the naira highlights the continued fragility of Nigeria’s foreign exchange market despite ongoing reforms. Until FX liquidity improves materially and inflows strengthen consistently, pressure on the local currency is likely to persist.
