Market News

BY Hope Moses-Ashike 

…Loses 0.4% in four consecutive trading days at official window

The naira on Wednesday recorded a sharp depreciation, falling to N1,625 per dollar in the black market. This represents a 1.5 percent drop in just one day when compared to Tuesday’s rate of N1,600.

According to a street currency trader, demand pressure contributed to the naira’s fall, as individuals and businesses scrambled to purchase dollars to cover basic needs and import obligations.

At the official foreign exchange (FX) market, the naira also witnessed a marginal but persistent weakening over the course of four trading days, even as Nigeria’s external reserves continued to improve.

Data from the Central Bank of Nigeria (CBN) shows that the country’s external reserves, which had been declining since January 7, 2025, have risen by 0.43 percent, reaching $38.09 billion as of May 6, 2025, up from $37.93 billion reported on April 30, 2025.

Despite this uptick in reserves, the naira still declined by 0.4 percent in the Nigerian Foreign Exchange Market (NFEM) after Wednesday’s trading session. The dollar was quoted at N1,608.60, compared to N1,602.18 recorded on May 2, 2025, based on CBN data.

Analysts attributed the depreciation in the NFEM window to falling liquidity levels. The foreign exchange market saw an inflow of $668 million last week, which reflects a 9 percent decline from the $735 million received the week prior, according to a report from the research department of Coronation Merchant Bank Limited.

The same report detailed the sources of the inflow: the CBN accounted for 27.73 percent, foreign portfolio investors (FPIs) contributed 9.22 percent, non-bank corporates brought in 33.43 percent, exporters added 24.34 percent, while other sources made up the remaining 5.28 percent. It also confirmed that Nigeria’s gross foreign reserves increased by 0.36 percent on a week-on-week basis, closing at $37.93 billion as of April 30, 2025.

Read also: Why naira should be below N1,000 to dollar – Adebajo

In addition to its decline against the US dollar, the naira also lost ground to the Chinese yuan (CNY), depreciating by 0.40 percent to close at N220.31 per yuan.

During the previous week, the naira fell by 0.17 percent against the US dollar in the official spot market, ending the week at N1,602.18 per dollar.

In the derivatives market, forward contract rates reflected expectations of continued naira depreciation: the 1-month forward closed at N1,646.57 per dollar, the 3-month at N1,724.19, the 6-month at N1,837.00, and the 1-year forward at N2,056.24.

Meanwhile, at the parallel market, last week, the naira maintained the same value as the previous week, closing at N1,610.00 per dollar on Friday.