The naira depreciated marginally to N1,383.5/$ on Tuesday from N1,383/$ on Monday, as declining external reserves and cautious global sentiment weighed on the market.
Data from the Central Bank of Nigeria (CBN) showed the currency traded within a band of N1,372/$ to N1,389/$ during the session, reflecting mild volatility.
The slight weakening underscores persistent pressure in the foreign exchange market, driven largely by a steady drawdown in external reserves. Market activity indicated moderate liquidity, with trading remaining stable but cautious in the Nigerian Foreign Exchange Market (NFEM).
The naira posted a simple average rate of N1,381.86/$ for the day, while total interbank turnover came in at $83.44 million across 88 deals.
Nigeria’s external reserves declined to $49.6 billion as of March 23, 2026, down from $49.8 billion recorded on March 18, signalling continued strain on the country’s FX buffers.
Despite the relative stability of the currency, underlying vulnerabilities linked to weakening reserves persist.
Global currency markets remained subdued amid geopolitical tensions and shifting monetary policy expectations. Investors continue to track developments in the United States–Iran tensions, which are shaping broader risk sentiment.
Major currencies showed limited movement: the euro and British pound edged up by 0.1 per cent, the New Zealand dollar was flat, while the U.S. dollar held steady against the Japanese yen amid signals from the Bank of Japan on potential rate hikes.
The U.S. dollar index dipped slightly by 0.1 per cent to 99.126, reflecting generally muted activity across currency markets, even as other asset classes reacted more sharply to geopolitical risks.
Monetary policy expectations in the United States also remain a key driver. The probability of a 25-basis-point rate hike by the U.S. Federal Reserve in December rose to 30.2 per cent from 8.2 per cent a day earlier.
Federal Reserve Governor Michael Barr signalled that interest rates could stay higher for longer, citing persistent inflation above the 2 per cent target.
Ongoing tensions in the Middle East continue to pose risks to global economic stability, with oil price movements and capital flows remaining critical to Nigeria’s exchange rate outlook.
Meanwhile, the CBN recently announced a medium-term inflation target of 6–9 per cent as it advances its transition to a full inflation-targeting framework.
The apex bank projects external reserves will rise to $51.04 billion in 2026, up from $45.01 billion in 2025, supported by improved external inflows and ongoing structural reforms.
Data from December 2025 had shown reserves at $45 billion — then a six-year high — underscoring the gains made before the current drawdown.
