The naira opened the new trading week on a weaker note, exchanging at N1,533.67 per US dollar at the official Nigerian Foreign Exchange Market, as recorded on the Central Bank of Nigeria (CBN) website. This represents a slight depreciation of 0.08 per cent from Friday’s close of N1,532.51/$, reflecting persistent external pressures and domestic market dynamics.
During intraday trading, the naira touched a high of N1,535/$ and a low of N1,532/$, despite the country’s external reserves improving to $40.72 billion as of last Wednesday.
Analysts noted that the currency’s marginal dip signals both the resilience and vulnerability of the naira in a volatile global environment.
At the parallel market, the naira closed at N1,543/$, marginally stronger than last week’s average of N1,545/$, demonstrating relatively stable demand amid continued supply pressures.
Observers expect the currency to trade largely stable at the official window this week, underpinned by ongoing CBN interventions and improved foreign exchange inflows.
According to Cowry Research, while stability is expected, headwinds from a stronger US dollar and softening crude oil prices could limit significant gains for the naira.
“Barring major shocks in global markets, the currency should hold steady, with intermittent pressure from external factors,” the firm stated, noting that speculative demand or supply constraints in the parallel market may trigger minor fluctuations.
AIICO Capital, in its weekly market update, reported that the CBN sold about $166 million last week to sustain liquidity and stabilize the currency.
The firm expects the FX market to maintain its current stability in the interim, supported by ongoing fiscal and monetary policy measures aimed at sustaining domestic and foreign liquidity.
Cordros Capital Limited echoed similar optimism, highlighting the role of sustained inflows from foreign portfolio investors.
“Improving non-oil exports and limited incentives for naira speculation are expected to reinforce steady inflows from domestic sources,” the firm noted.
Analysts believe that growing investor confidence, along with ongoing interventions by the CBN, could mitigate extreme volatility in the near term.
The naira’s marginal weakening has implications for import-dependent businesses, particularly manufacturers, retailers, and service providers relying on foreign currency for raw materials, equipment, and other operational needs.
A weaker naira typically increases import costs, which may translate into higher prices for consumers and potential inflationary pressures.
Financial experts stress the need for businesses to adopt proactive currency risk management strategies.
Diversifying supply sources, renegotiating contracts in local currency, and leveraging hedging instruments are some measures recommended to mitigate the impact of naira depreciation on operating costs.
Looking ahead, analysts expect the naira to maintain relative stability this week, provided crude oil prices remain moderate and foreign capital inflows continue.
Market participants are closely monitoring global economic developments, including US dollar movements, crude oil price trends, and monetary policy adjustments, which could influence the naira’s trajectory.
The gradual stabilization of the naira is crucial for Nigeria’s macroeconomic health, investor confidence, and the broader financial market.
As policymakers continue to refine interventions and strengthen liquidity management, the naira’s performance in the coming weeks will remain a key indicator of market sentiment and economic resilience.