The Nigerian naira weakened significantly on Wednesday as demand for U.S. dollars outpaced supply in the official foreign exchange window. Central Bank of Nigeria (CBN) data showed the naira closed at ₦1,549.20/$, a sharp drop from ₦1,345.26 the previous day.
This depreciation underscores persistent liquidity constraints in the market, even as the CBN continues its intervention efforts to stabilize the naira. Nigeria’s foreign reserves have now dipped below the $38 billion mark, reflecting sustained pressure on the apex bank’s external buffers.
While the central bank injected approximately $580 million into the market during May, analysts observed a reduced pace of intervention compared to prior months. However, forex market watchers are concerned that this strategy may not be sustainable over time.
Commenting on the situation, analysts at Verto noted, “The CBN’s injections appear more focused on ensuring liquidity rather than controlling the exchange rate directly. But prolonged support at this level may have long-term consequences.”
Projections suggest the exchange rate could settle near ₦1,600/$ in 2025, buoyed by anticipated economic recovery and fiscal discipline. In the parallel market, the naira also weakened, closing at ₦1,565/$.
Market analysts are urging the CBN to adopt more transparent market practices and resist excessive interventions that could widen the gap between official and parallel rates. As pressure builds, clarity on policy direction will be key to ensuring long-term exchange rate stability.
