The Nigerian naira experienced a notable drop in value on the official foreign exchange window, following a sharp downturn in foreign exchange inflows which fell to their lowest point in six months, as disclosed by FMDQ data.
During last week’s trading session, the naira briefly touched ₦1,570 per US dollar during intraday trading as surging offshore demand overshadowed the available hard currency supply. By the end of the session, the official exchange rate closed at ₦1,567 per dollar.
The Nigerian interbank foreign exchange market displayed heightened volatility across two of the three trading days last week, largely influenced by the Central Bank of Nigeria’s (CBN) actions. Early in the week, the exchange rate held relatively stable, fluctuating between ₦1,525 and ₦1,535 per dollar, supported by moderate foreign investor participation.
However, midweek saw a significant shift in momentum as offshore demand escalated amid falling oil prices triggered by increased OPEC+ production and global risk aversion following former U.S. President Donald Trump’s new tariff declarations. AIICO Capital Limited noted that these factors intensified pressure on the FX market, reducing available supply and causing the naira to spike to ₦1,570 per dollar.
On Friday, the CBN stepped in with a foreign exchange intervention worth $197.7 million, selling at rates between ₦1,519 and ₦1,595.20 per dollar. Despite this effort, the naira still depreciated by 1.97%, closing at ₦1,567.02.
Nigeria’s external reserves also took a hit for the third consecutive week, falling by $135.57 million to $38.17 billion as the apex bank sustained its forex market support efforts.
Forward contract markets reflected the broader FX market weakness. According to Cordros Capital Limited, the one-month naira forward contract depreciated by 2.8% to ₦1,619.49 per dollar. The three-month contract fell by 3.4% to ₦1,689.27, the six-month by 2.9% to ₦1,772.91, and the one-year contract declined by 2.1% to ₦1,930.55.
AIICO Capital expects the CBN to continue defending the naira aggressively as foreign currency demand strengthens, particularly amid declining global oil consumption and expanded OPEC+ output.
Data from the FMDQ platform showed that overall inflows into the Nigerian Foreign Exchange Market (NFEM) decreased by 5.5% in March to $3.90 billion, down from $4.13 billion in February.
The most significant drop was recorded in foreign inflows, which plummeted by 61.9% month-on-month to $787.20 million—the lowest in six months—attributed to waning market confidence amidst international trade tensions.
As a result, foreign portfolio investment (FPI) contributions dwindled, although there were increases from other corporates and foreign direct investment channels.
Conversely, local inflows surged in March to their highest in 22 months, increasing by 51.0% to $3.11 billion from $2.06 billion. This was primarily driven by a 204.3% increase in CBN injections and a 26.7% rise from non-bank corporates.
The exporters and importers category also contributed positively with a 21.5% increase, although individual inflows contracted by 43.7% over the same period.
Cordros Capital noted that while FX inflows may remain stable in the short term due to improved market confidence, declining yields and global trade uncertainties are likely to curb FPI interest, potentially straining overall market liquidity.
Meanwhile, oil prices saw a dramatic plunge of nearly 7% on Friday—marking their lowest level in more than three years—as growing tensions between the U.S. and China intensified fears of a global economic slowdown.
China’s declaration of a 34% tariff on all U.S. imports starting April 10 sparked fears of a prolonged trade war, weighing heavily on energy markets. Brent crude fell by $4.56 or 6.5% to settle at $65.58 per barrel, while WTI shed $4.96 or 7.4% to close at $61.99. Both benchmarks hit four-year lows during the session.
On a weekly basis, Brent declined by 10.9%—its sharpest weekly fall in 18 months—while WTI tumbled by 10.6%, the largest in two years. Gold also suffered a setback, retreating by 2.9% to $3,024.20 per ounce as investors liquidated holdings to cover broader market losses.
