Naira Depreciates to ₦1,495.60/$ at Official Market, Loses 1.4% in a Day

 The Naira continued its downward slide against the U.S. dollar, closing at ₦1,495.60 per dollar on Monday in the official market, marking a 1.4% decline from Friday’s rate of ₦1,474.78.

According to data from the FMDQ Securities Exchange, trading on the Investors and Exporters (I&E) Forex window saw the currency fluctuate between a high of ₦1,497.50 and a low of ₦1,470.00 during the session.

The depreciation comes despite recent Central Bank of Nigeria (CBN) interventions aimed at stabilizing the foreign exchange market. Over the past few months, the apex bank has introduced several measures, including:

• Waivers on 2025 license renewal fees for Bureau de Change (BDC) operators.
• An extension of the dollar sales deadline to May 30 to ease liquidity constraints.
• Tighter forex regulations to curb speculative trading and round-tripping.

What is Driving the Naira’s Weakness?

Financial analysts attribute the currency’s persistent depreciation to several key factors, including:

1. Demand-Supply Imbalance – A higher demand for dollars, driven by importers, multinational companies, and foreign investors seeking capital repatriation, continues to outweigh the available supply.
2. Oil Revenue Decline – Nigeria’s forex earnings heavily depend on crude oil sales. Volatility in global oil prices and declining production levels have weakened the country’s dollar inflows.
3. Foreign Investor Skepticism – Uncertainty surrounding Nigeria’s monetary policy direction, coupled with concerns over inflation and economic stability, has kept foreign portfolio investors cautious.
4. Parallel Market Pressure – The continued disparity between the official and parallel market exchange rates, where the Naira is trading around ₦1,520 – ₦1,550/$, suggests ongoing pressure from unofficial forex transactions.

Market Reactions and Outlook

Some economists argue that the CBN’s recent reforms could restore investor confidence in the long run, but short-term volatility remains a concern. According to financial expert Bismarck Rewane, “The market is still reacting to past inconsistencies in monetary policy. Until forex inflows improve, the Naira will remain under pressure.”

Despite the CBN’s interventions, speculations persist that the Naira may breach the ₦1,500/$ mark in the official market soon, especially if demand pressures persist. However, some analysts remain optimistic, citing the possibility of increased dollar liquidity from remittances, foreign investments, and oil revenue improvements in the coming months.