The Nigerian naira continues to struggle against the U.S. dollar, with increasing demand for foreign currency putting significant pressure on exchange rates across various forex markets.
As of this morning, the naira is trading at N1,600 per dollar in the parallel market, having lost N20 in just one day after closing at N1,580 on Wednesday. The official exchange rate has also weakened, falling to N1,538 per dollar, despite interventions by the Central Bank of Nigeria (CBN).
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.
Without additional interventions from the CBN or increased dollar inflows, experts warn that the naira could weaken further, surpassing N1,600 per dollar in the near future.
