The Nigerian naira weakened against the US dollar in the official foreign exchange market on Wednesday, closing at N1,340 despite a central bank intervention aimed at stabilising the currency.
The Central Bank of Nigeria (CBN) sold dollars into the market to absorb excess liquidity after a brief period of strengthening. However, this measure was insufficient to counter sustained pressure, leading to a depreciation from the N1,337 rate recorded the previous day.
Trading activity at the Nigerian Foreign Exchange (NAFEX) window began calmly with limited volumes. The market received some support from foreign portfolio investor inflows later in the session, which briefly pushed the rate to a stronger intraday high of N1,328 per dollar and a rate of N1,336.67.
Midway through the trading day, the CBN intervened by increasing its market offers to mop up naira liquidity. Despite this, the gains were not maintained, and the naira ended the day at the lower rate.
The depreciation in the official market was mirrored in the parallel (black) market, where the naira also fell significantly to N1,400 per dollar from Tuesday’s N1,382.50. This movement further widened the gap between the official and unofficial exchange rates, a long-standing indicator of underlying demand-supply imbalances in the foreign exchange market.
The day’s trading produced a volume-weighted average rate of N1,338.11 per dollar, with the naira trading between an intraday low of N1,340 and a high of N1,328.
The persistent weakness of the naira in both market segments, despite periodic central bank actions, underscores the challenges of stabilising the local currency amid constrained foreign exchange supply. The widening disparity between official and parallel rates continues to point to unmet demand in the official window and highlights the ongoing pressure on the country’s external reserves. Market watchers note that consistent liquidity injections and structural reforms are often cited as necessary steps to foster greater convergence and stability in the foreign exchange rate.
