By Boluwatife Oshadiya
Key Points
- Naira depreciates to ₦1,380/$ at official market
- FX demand outpaces supply amid investor pressure
- Interbank turnover rises to nearly $99 million
- Oil prices climb above $110, adding inflation concerns
Main Story
The Nigerian naira weakened further against the US dollar on Tuesday, closing at ₦1,380/$ at the Nigerian Foreign Exchange Market (NFEM), as demand for foreign currency continued to outstrip available supply.
Data released by the Central Bank of Nigeria showed that the local currency traded within a wide band, hitting an intraday high of ₦1,385 and a low of ₦1,367.50, compared to ₦1,370 recorded in the previous session.
The depreciation comes amid increased foreign exchange demand driven by foreign portfolio investors maintaining short positions in Nigerian markets, thereby intensifying pressure on the naira.
Interbank market activity also surged, with turnover rising to $98.83 million across 78 deals, up from $76.65 million recorded earlier, reflecting heightened trading activity and liquidity pressures.
In the parallel market, the naira weakened further to ₦1,390/$, indicating sustained pressure across both official and informal FX segments.
What’s Being Said
Financial analysts point to structural imbalances in Nigeria’s FX market, where demand continues to exceed supply despite interventions by the apex bank.
Nigeria’s external reserves stood at $48.389 billion, providing some buffer; however, persistent FX demand and capital outflows remain key concerns.
Meanwhile, global oil prices surged, with Brent crude climbing above $110 per barrel amid geopolitical tensions involving the United States and Iran. Higher oil prices could improve Nigeria’s FX inflows but may also stoke inflationary pressures.
What’s Next
Market watchers expect continued volatility in the FX market, particularly as external factors such as oil prices and global monetary tightening influence capital flows.
Policy direction from the Central Bank, alongside efforts to boost FX liquidity through exports and investment inflows, will be critical in stabilising the naira in the coming weeks.
