Share this article

The Nigerian naira continued its slide against the U.S. dollar last week, despite three separate intervention sales by the Central Bank of Nigeria (CBN) aimed at stabilizing the foreign exchange (FX) market.

The local currency depreciated by 33 basis points week-on-week, closing at ₦1,540 per dollar in the autonomous FX market. Transactions ranged between ₦1,520 and ₦1,549, reflecting sustained pressure from high demand for foreign currency.

In the official FX market, strong dollar demand further eroded the naira’s value, with the currency losing ₦5 per dollar on traded transactions. While market liquidity was relatively robust, it remained insufficient to strengthen the naira as seen earlier in December.

To mitigate the naira’s freefall, the CBN increased FX supply through multiple intervention auctions. Over the week, the apex bank injected a total of $124.6 million into the market:

$28.5 million at the open FX auction for local banks early in the week,
$61.1 million in a midweek intervention, and
$35 million on Friday to authorized dealers.

Despite these efforts, the naira weakened further in the parallel market, losing ₦135 to close at ₦1,650 per dollar, driven by heightened demand for the U.S. currency.

This divergence in exchange rates widened the spread between the official and parallel markets to ₦110, or 7.14%, underscoring ongoing market inefficiencies.

Analysts highlight that the sustained gap between official and parallel market rates reflects structural challenges in Nigeria’s FX market, exacerbated by surging demand and limited dollar inflows from exports and other sources. The CBN’s interventions have provided temporary relief but underscore the need for long-term solutions to bolster the naira and stabilize the market.

Share this article