The Nigerian naira weakened against the U.S. dollar across foreign exchange markets despite three rounds of intervention by the Central Bank of Nigeria (CBN) in a single week.
The local currency depreciated by 33 basis points week-on-week, closing at N1,540 per U.S. dollar in the autonomous FX market, with transaction rates ranging from N1,520 to N1,549. Elevated demand for foreign currency in the official market led to a loss of N5 per dollar, exacerbating the naira’s struggles. While forex market liquidity was robust, it was insufficient to significantly strengthen the local currency, unlike earlier in December.
Dollar inflows from exports supported the supply side in the official market, while the CBN’s foreign currency auction sales aimed to bolster liquidity further. The apex bank conducted three separate sales to local deposit money banks during the week.
In total, the CBN sold $124.6 million in FX interventions. This included $28.5 million at the open market auction early in the week, $61.1 million midweek, and another $35 million on Friday. These measures were aimed at stabilizing the naira and curbing excessive depreciation.
Despite these efforts, the naira’s value dropped by N135 in the parallel market, closing at N1,650 per dollar due to heightened demand for U.S. dollars. This widened the exchange rate gap between the official and parallel markets to N110, or 7.14%, according to analysts.
The persistent pressure on the naira highlights the ongoing challenges facing Nigeria’s currency amid fluctuating forex inflows and strong dollar demand.
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