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The naira experienced a sharp decline on Monday, depreciating by approximately N6 against the US dollar in the official market. The currency weakened to close at N1,548.89 per dollar, driven by heightened demand for foreign exchange and limited FX liquidity.
CBN’s FX Interventions Fall Short
The Central Bank of Nigeria (CBN) intervened twice in the foreign exchange market last week to mitigate volatility and improve liquidity. Despite these efforts, the naira continued to lose value.
During the first FX auction, the CBN injected $50 million into the market, yet the naira depreciated further. On Friday, the apex bank slightly increased its intervention, selling $59 million to authorized dealer banks. Both interventions, amounting to $109 million, aimed to address demand pressures but yielded limited success.
According to dealers, the auctions were priced between N1,535 and N1,546 per US dollar. However, demand for foreign currency remained strong, complicating efforts to stabilize the exchange rate.
Persistent Pressures on the Naira
Market data from the previous week highlighted a total depreciation of approximately N9 against the dollar. Additionally, Nigeria’s external reserves—although still robust—have experienced four declines in 2025, signaling potential vulnerabilities in the country’s economic defenses.
Global Commodity Market Updates
In the global commodity market, crude oil prices continued their upward trajectory for the third consecutive session. Brent crude surpassed $80 per barrel, marking its highest price in over four months. This rally was driven by expanded U.S. sanctions on Russian oil, which are expected to disrupt exports to major buyers like India and China.
As of the latest trading session, Brent crude was quoted at $81.03 per barrel, while WTI hovered around $78.00 per barrel.
Meanwhile, gold prices declined as the US dollar reached a two-year high, bolstered by a strong jobs report last week. This development has reinforced expectations that the Federal Reserve will adopt a cautious approach to cutting interest rates in the near term.
Conclusion
The CBN’s continued efforts to stabilize the naira through FX interventions underline the challenges posed by rising demand and limited liquidity. As Nigeria navigates these economic headwinds, external factors such as global commodity price movements and foreign reserves trends will also play a crucial role in shaping the currency’s trajectory.
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