Nigeria’s currency, the naira, recorded its steepest single-day depreciation since April, closing at N1,389 against the United States dollar at the official foreign exchange market on Wednesday.
Data from the Central Bank of Nigeria (CBN) showed that the local currency weakened by N16, representing a 1.2 per cent decline from the N1,373/$ exchange rate recorded on Tuesday.
The latest closing rate marks the weakest level for the naira since April 7, when it also traded at N1,389 to the dollar, underscoring renewed pressure on the foreign exchange market.
Market data indicated that the naira traded within a range of N1,368 and N1,392 per dollar during the trading session, while the weighted average exchange rate settled at N1,380.08/$ and the simple average rate stood at N1,380.46/$.
Despite the depreciation, activity at the Nigerian Foreign Exchange Market (NFEM) remained relatively stable, with interbank turnover rising marginally to $125.59 million from $125.31 million recorded in the previous session. The number of transactions also increased to 126 deals, up from 106 deals a day earlier.
Financial analysts attributed the naira’s latest slide largely to the strengthening of the U.S. dollar in global markets.
According to financial economist at Kwik Securities Ltd, Muftau Yusuf, the stronger dollar environment is exerting pressure on emerging and frontier market currencies, including the naira.
“When global investors shift towards dollar-denominated assets because of higher U.S. yields, emerging market currencies tend to come under pressure. Nigeria is not immune to these global trends,” Yusuf said.
The naira had maintained relative stability for much of June, trading between N1,356 and N1,375 per dollar. However, recent sessions have witnessed a reversal of earlier gains, with the currency weakening from N1,369/$ on June 22 to N1,373/$ on June 23 before falling further to N1,389/$ on June 24.
The depreciation comes despite improvements in Nigeria’s external reserves, which recently climbed above $51 billion, their highest level since 2009, supported by stronger foreign exchange inflows and ongoing market reforms by the CBN.
