The Nigerian naira fell to a new record low against the US dollar on Monday, despite another round of intervention from the Central Bank of Nigeria (CBN) in the foreign exchange market.
The local currency depreciated by 2.90% to close at N1,612 per dollar, even as the CBN injected additional dollar liquidity into the market in an effort to curb volatility and meet rising demand.
AIICO Capital Limited attributed the continued downward pressure on the naira to unrelenting demand, particularly from foreign portfolio investors (FPIs) seeking to repatriate funds amid increasing global risk aversion.
In a bid to ease the stress in the Nigerian Autonomous Foreign Exchange Market (NAFEM), the CBN supplied $124 million, with rates ranging between N1,595 and N1,611. The exchange rate fluctuated between N1,590 and N1,655 before closing at N1,612.2368, representing a 2.89% decline.
Financial analysts warn that with investor sentiment remaining weak and risk appetite diminishing globally, capital flight may intensify. Nevertheless, AIICO Capital believes the apex bank will continue its interventions to maintain market stability.
March proved particularly challenging for the naira, which depreciated by 2.97% over the month. The CBN sold a total of $668.8 million to try and stabilize the market, but the currency still weakened to N1,536.82/$ by month-end, from N1,492.49/$ at the beginning of March.
The interbank market kicked off trading at N1,510/$ and sustained heavy demand, especially from FPIs and domestic corporates. The parallel market echoed this trend, sliding by N43.50 to N1,536.00/$.
Midway through March, foreign exchange liquidity improved due to the CBN’s actions, but demand continued to outpace supply. Meanwhile, global oil prices dropped nearly 2% on Monday amid heightened concerns that escalating tariffs by US President Trump could trigger a worldwide recession and dampen energy demand.
The crude oil market was highly volatile, with prices swinging more than $3 overnight before slightly rebounding after the White House labeled rumors of a tariff moratorium as “fake news.”
Brent crude fell by $1.24 or 1.9% to $64.34 per barrel, while US West Texas Intermediate (WTI) crude dropped $1.21 or 2% to settle at $60.78. Both benchmarks were on track for their lowest closing levels since April 2021 following an 11% plunge the previous week.
Meanwhile, gold prices declined by 1.3% to $2,999.49 as investors shifted their capital into the US dollar, even though lingering uncertainty over the global economy kept investor interest in bullion relatively strong.