The Nigerian naira struggled at the official exchange rate window last week, shedding 1.25 percent week-on-week and closing at 1536.89/$ on Friday. Data from the Central Bank of Nigeria (CBN) showed the currency started the week at 1,528.03/$, down from 1,517.93/$ in the previous trading session, and continued to depreciate despite attempts to stabilize it.
The naira’s decline comes amid stalled negotiations between the Nigerian National Petroleum Corporation Limited (NNPC) and local refineries over a naira-for-crude agreement. While the discussions are expected to resume this week, the situation has added pressure on the foreign exchange market. Dangote Petroleum Refinery has already halted petroleum product sales in naira due to a currency mismatch, further increasing demand for US dollars to import fuel.
Despite efforts by the CBN to boost foreign exchange supply through interventions, experts caution that these measures may offer only temporary relief. Analysts have noted that the lack of structural reforms to address Nigeria’s long-standing foreign exchange challenges remains a key obstacle.
“Looking ahead, we anticipate a mixed outlook for the naira as demand for the US dollar intensifies. Speculators will likely continue exploiting arbitrage opportunities, although we expect the CBN to maintain its weekly interventions to stabilize the currency,” said experts from Cowry Assets Management Limited.
At the parallel market, the naira saw a slight gain, appreciating by 0.77 percent week-on-week to close at 1,568/$ on Friday, though challenges remain for the currency’s stability.
Meanwhile, Nigeria’s foreign reserves saw a minimal decline of 0.06 percent, from $38.37 billion to $38.35 billion, as of Thursday, reflecting ongoing efforts by the CBN to defend the local currency amid limited foreign exchange inflows.
Concerns over oil prices have further contributed to foreign exchange volatility. The benchmark Brent crude oil price advanced by 3 percent week-on-week, reaching approximately $85.00 per barrel, fueled by concerns over supply following new U.S. sanctions on Iran and OPEC+ production cuts.
