Nigeria’s currency closed last week with mixed fortunes across different market segments, reflecting persistent volatility in the foreign exchange (FX) landscape despite the Central Bank of Nigeria’s continued interventions.
At the official National Foreign Exchange Market (NFEM), the naira gained marginally, appreciating by 0.01% to close at ₦1,533.57/$ from the previous week’s ₦1,533.74/$. However, at the parallel market, it was a different story: the currency weakened by 0.52% week-on-week, trading at an average of ₦1,545/$, according to Cowry Asset Management’s weekly FX report.
Market watchers attributed the disparity to a surge in FX demand from businesses and individuals, a pressure point worsened by seasonal travel and continued dollar illiquidity.
National President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, noted that while the CBN has stepped up its liquidity injections, demand continues to outpace supply.
“The bottom line is liquidity,” Gwadabe told The Punch. “Travellers’ demands, seasonal factors, and broader market drivers are putting pressure on the naira. Volatility has been there, but the spread between the official and open markets is starting to widen again.”
This widening spread had narrowed in recent weeks, calming speculative trading, but last week’s uptick could re-ignite arbitrage pressures if not contained.
The CBN’s recent clearance of all valid outstanding FX forward contracts has bolstered confidence at the official market. The apex bank revealed that a forensic audit of past contracts uncovered irregularities, including inflated sales values, mismatched documentation, and unauthorised imports.
The CBN says it has closed the chapter on undelivered forward contracts and may pursue legal action against violators. Analysts say this clean-up could restore credibility in FX transactions, which is vital for attracting foreign portfolio inflows.
Analysts at Cowry Asset Management believe the naira’s marginal gains could continue this week, supported by the CBN’s interventions. However, they warn of external risks:
Volatile crude oil prices — especially recent downward trends that could erode Nigeria’s FX reserves
Geopolitical uncertainty affecting investment flows into emerging markets
Similarly, AIICO Capital sees near-term stability, pointing to the CBN’s policy refinements and market clean-up as supportive factors.
Investor Impact — What to Watch
For investors and corporate treasurers, the mixed naira performance signals a need for active FX risk management.
A widening official–parallel market spread could distort pricing for import-dependent sectors.
The CBN’s audit crackdown may improve transparency but could also slow FX allocation to companies flagged for documentation errors.
Persistent high FX demand, coupled with falling oil revenues, may pressure reserves, potentially leading to tighter CBN interventions in the months ahead.
If oil prices continue to dip below Nigeria’s budget benchmark, analysts warn that the naira’s stability could become harder to defend, particularly if global investors adopt a “risk-off” stance.