The naira extended its downward trend on Friday, closing at N1,361.5 per dollar—its weakest level in three weeks—as persistent demand pressures and limited foreign exchange (FX) supply weighed on the market.
Data from the Central Bank of Nigeria (CBN) show the local currency depreciated through most of the trading week, underscoring sustained volatility in the FX market.
The naira fell from N1,355/$ on Thursday and N1,348.1/$ on Wednesday, after earlier settling at N1,350.99/$ on Tuesday and N1,349.67/$ on Monday. Compared to the previous Friday’s closing rate of N1,342.5/$, the currency has weakened by nearly N20 within a week.
Friday’s closing rate also marks the softest level since April 9, when the naira traded at N1,365/$.
Drivers of the decline
Market analysts attribute the sustained depreciation to a combination of structural and short-term factors, including elevated demand for dollars, constrained FX inflows, and lingering uncertainty in global markets.
A forex analyst, Samuel Obadofin, noted that demand—particularly from importers and manufacturers—continues to outstrip supply.
“Demand for dollars is still significantly higher than supply… This imbalance is putting sustained pressure on the naira despite policy interventions,” he said.
He added that a recurring mid-week surge in dollar demand often drives rates higher toward the close of trading sessions, warning that the pattern may persist until liquidity improves.
Reserves dip, liquidity tightens
CBN data also show that Nigeria’s external reserves declined to $48.4 billion, down from $48.54 billion at the start of the week on April 20, 2026.
The dip reflects ongoing FX interventions and limited inflows, further tightening market liquidity.
Broader market context
Additional pressure has come from:
- Strong global dollar conditions
- Fluctuations in crude oil prices, which affect Nigeria’s FX earnings
- Seasonal demand for foreign currency
- Limited supply through official FX windows
While recent exchange rate reforms have improved transparency and market structure, analysts say near-term liquidity constraints remain unresolved.
Outlook
The trajectory of the naira will likely depend on:
- Improved FX liquidity and inflows
- Stability in global oil markets
- Effectiveness of ongoing monetary and FX policy measures
Higher oil prices could provide some relief by boosting FX earnings, but global uncertainties may continue to offset potential gains.
Meanwhile, CBN Governor Olayemi Cardoso has downplayed concerns over the recent decline in external reserves, suggesting the current trend remains within manageable bounds.
