The Nigerian naira has experienced a decline in value, dropping to ₦1,483/$ on Wednesday morning, after maintaining stability in late November. This downward trend is attributed to increased demand for dollars by importers and retailers preparing for Christmas and New Year’s sales.

According to data from the Central Bank of Nigeria, the naira weakened after the dollar was quoted at ₦1,454.38/$ on Tuesday, compared to ₦1,448.43/$ on Monday in the Nigerian Foreign Exchange Market. Traders report that the market has been under mild but continuous stress as businesses front-load their foreign exchange obligations ahead of year-end.

The US Federal Reserve’s hawkish stance, characterized by higher interest rates, is also exerting pressure on the naira in the unofficial market. This has led to an increase in retail-level dollar purchases, particularly in the parallel market, driven by rising international travel reservations and overseas school fees.

Despite the current decline, the naira has appreciated by about 5.7% against the US dollar year-to-date, thanks to interventions by the Central Bank of Nigeria, foreign exchange reforms, and diaspora remittances. The currency has stabilized in the ₦1,450–₦1,470/$ range since early December.

The current pressure on the naira is largely driven by seasonal demand for foreign exchange. As the year draws to a close, businesses and individuals are seeking to fulfill their foreign exchange obligations, leading to increased demand for dollars. The Central Bank of Nigeria’s efforts to stabilize the currency and maintain a stable foreign exchange market will be closely watched in the coming weeks.

The naira’s performance is significant for Nigeria’s economy, as a stable currency can boost investor confidence and support economic growth. As the country navigates the challenges of a global economic downturn, the management of its foreign exchange market will remain a key area of focus.