The naira closed the trading week weaker at the official foreign exchange market, settling at N1,421.9 per dollar, as domestic supply constraints continued to outweigh the impact of a softer U.S. dollar globally.
Data from the Central Bank of Nigeria (CBN) show that the local currency recorded marginal losses during the week, despite a period of global dollar weakness. The performance underscores persistent distortions in Nigeria’s foreign exchange market, with pressure evident across both the official and parallel segments.
At the official market, the naira experienced mild but sustained depreciation amid thin FX liquidity. Although the currency avoided sharp swings, it failed to sustain the gains recorded earlier in the week.
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The naira closed at N1,421.9/$ on Friday, compared with N1,421.5/$ on Thursday and N1,423/$ on Wednesday. It traded at N1,420/$ on Tuesday and N1,420.5/$ on Monday, after opening the week at N1,425/$. Compared with last Friday’s closing rate of N1,417.95/$, the currency ended the week weaker overall.
In the parallel market, the naira depreciated slightly to N1,491/$ on Friday from N1,490/$ the previous day. Research data show weekly trading within a range of N1,483 to N1,491 per dollar, widening the gap between the official and parallel markets to about N70/$.
A Lagos-based currency trader Dayo Omole attributed the divergence to domestic supply constraints.
“Nigeria has restrictions on foreign currency access and a limited dollar supply, so the naira may not strengthen as much in the parallel market. Sometimes, the parallel market rate can even move differently due to supply and demand pressures that are unrelated to the dollar’s global value,” he said.
He added that when the dollar weakens globally but Nigeria continues to face FX shortages, the gap between official and street rates can widen further.
Nigeria’s foreign exchange market remains under strain after years of FX controls, multiple exchange rates, and limited dollar inflows. Although recent CBN reforms are aimed at improving transparency and market efficiency, structural challenges continue to weigh on price discovery.
FX supply remains constrained by weaker oil export receipts, subdued foreign portfolio investment inflows, and inconsistent diaspora remittances. The persistence of a wide spread between official and parallel rates reflects unmet demand and lingering confidence issues among market participants.
While the CBN has made progress toward unifying exchange rates and restoring investor confidence, the pace of improvement has been slower than market expectations.
Nigeria’s external buffers provide some support for currency management. External reserves stood at $45.9 billion last week, according to the CBN, offering limited capacity for market intervention. The International Monetary Fund recently upgraded Nigeria’s 2026 growth forecast to 4.4 per cent from 4.2 per cent, citing optimism around ongoing reforms.
However, geopolitical risks and policy uncertainty in the United States added volatility to global FX markets during the week, indirectly affecting frontier currencies such as the naira.
Nairametrics
