The Nigerian naira weakened to around N1,383.5 per dollar at the official foreign exchange market, as the country’s external reserves declined to approximately $49.6 billion, reinforcing pressure on the local currency amid persistent dollar demand and reduced FX buffers.
Data from the Central Bank of Nigeria showed the depreciation followed sustained outflows from the nation’s reserves, which have slipped below the $50 billion threshold after multiple consecutive declines driven by external payments and market interventions.
The currency’s decline reflects intensified demand for the US dollar across both official and parallel markets, alongside weakening supply conditions.
Analysts attribute the pressure to global risk aversion, increased appetite for safe-haven assets, and continued capital outflows, all of which have tightened liquidity in Nigeria’s foreign exchange market.
Despite earlier gains supported by foreign portfolio inflows, exporter proceeds, and periodic interventions by the apex bank, the naira has reversed course as underlying vulnerabilities persist.
The exchange rate had recently strengthened to around N1,344/$ before renewed pressure triggered a sharp depreciation. External reserves, which serve as a buffer for defending the currency and meeting international obligations, have continued to trend downward, falling from just above $50 billion to below that mark within days.
The decline signals limited capacity for sustained intervention by monetary authorities in the face of persistent FX demand. Although global oil prices remain elevated typically a positive for Nigeria’s FX earnings the expected boost to reserves has been constrained by weak production levels, ongoing outflows, and structural imbalances in the external sector.
The development underscores fragile exchange rate stability, with market outlook hinging on the pace of FX inflows, central bank policy direction, and broader global economic conditions.
Source: Nairametrics
