The Nigerian naira extended its losing streak for the third consecutive day on Wednesday, closing at N1,473.29 per dollar at the official foreign exchange window.
The persistent slide underscores renewed volatility in the forex market despite ongoing Central Bank of Nigeria (CBN) reforms and increased optimism over the nation’s external reserves.
Naira Dips Third Consecutive Day: Tracking the Currency’s Decline
Data from the Central Bank of Nigeria (CBN) showed that the naira opened the week at N1,457.51/$, slipped to N1,463.23/$ on Tuesday, and further weakened by N10.06 or 0.69 per cent to settle at N1,473.29/$ on Wednesday.
At the parallel market, the naira traded more favorably, appreciating slightly from N1,500/$ on Tuesday to N1,488/$ on Wednesday, according to data from CardinalStone Partners Limited.
Analysts at Cowry Assets Management Limited attributed the recent depreciation to diminished demand appetite and weak liquidity conditions in the official market.
“The naira’s recent slide indicates pressure from limited inflows and cautious investor participation,” the firm said.
“While optimism remains around sustained interventions and reforms, a short-term reversal may depend on higher oil earnings and stronger dollar inflows.”
The downward movement contrasts sharply with the optimism that greeted the local currency last week when it hit a 10-month high at N1,455.17/$, its strongest level since December 2024.
CBN’s Confidence and the Battle for Currency Stability
Despite the naira’s recent dip, CBN Governor Olayemi Cardoso remains confident that Nigeria’s monetary policy reforms are yielding results.
Speaking at the G-24 media briefing on the sidelines of the ongoing IMF/World Bank Annual Meetings in Washington, Cardoso said the naira had become “more competitive” following key reforms aimed at building market resilience.
“We were able to create resilience and buffers against potential shocks,” Cardoso said.
“In terms of anchoring expectations, those who have followed the Nigerian economy are fairly comfortable. Nigeria is restructuring its economy, and a competitive currency is helping drive that transformation.”
The apex bank has over the past year intensified its currency stabilization measures through improved transparency in forex sales, removal of multiple exchange rates, and policies encouraging export earnings repatriation.
These moves have helped the CBN gradually restore investor confidence and stimulate dollar liquidity.
Reserves Strengthen Amid Naira Weakness
Despite the naira’s slide, Nigeria’s foreign reserves have continued to strengthen. As of Monday, the reserves stood at $42.63 billion, slightly higher than $42.59 billion recorded on Friday.
This upward trend suggests improved foreign inflows, largely buoyed by steady oil receipts and higher remittance volumes.
Economic analysts say the steady growth in reserves is critical for maintaining confidence in the foreign exchange market.
According to Cordros Capital Limited, “While the recent weakening of the naira raises short-term concerns, the steady growth in reserves provides a necessary cushion to withstand volatility and signals that Nigeria’s external balance is improving gradually.”
However, experts caution that the upward trend in reserves must translate to consistent supply-side stability to sustain long-term forex balance.
Market Outlook: Analysts Weigh in on the Naira’s Path Forward
The recent depreciation pattern has sparked debate among market watchers.
Many analysts expected the naira to stabilise due to ongoing reforms and renewed investor confidence, but Cowry Assets Management warns that the recovery path remains delicate.
The firm noted that “rising import demand or weaker dollar inflows could slow further gains.”
It also observed that volatility in the global oil market may affect Nigeria’s foreign exchange conditions, keeping investors cautious in the near term.
Oil prices, a critical determinant of Nigeria’s forex supply, have been under mild pressure amid global supply growth and concerns about demand in China and Europe.
However, analysts believe that any rebound in oil demand or price could provide a short-term boost to Nigeria’s foreign exchange market.
CBN Reforms and Market Sentiment: Balancing Policy and Confidence
The CBN’s ongoing reforms remain central to Nigeria’s foreign exchange stability.
Measures such as the unification of the exchange rate, renewed transparency in FX transactions, and clearance of foreign exchange backlogs have restored a degree of confidence among investors and traders.
However, short-term pressures, particularly from importers and speculative trading, continue to influence daily rate fluctuations.
Financial analysts believe that further fiscal coordination and stronger capital inflows are key to sustaining naira stability.
According to Financial Derivatives Company, “The naira’s depreciation this week reflects short-term corrections rather than structural weakness.
What is important now is sustaining investor confidence through consistency in CBN policy communication, liquidity support, and fiscal coordination.”
Cautious Optimism for the Naira
The naira’s dip for the third consecutive day highlights ongoing challenges in Nigeria’s forex market, where structural reforms are yet to fully shield the local currency from short-term shocks.
Yet, with improving reserves, continued CBN interventions, and optimism around oil revenue recovery, analysts project a gradual rebound once dollar inflows strengthen.
As Nigeria’s policymakers continue to recalibrate the economy toward competitiveness and productivity, the trajectory of the naira remains a critical barometer of market confidence and macroeconomic stability.
