The Nigerian Naira weakened against the US Dollar at the start of the trading week, extending a recent depreciation trend despite rising external reserves.
According to data from the Central Bank of Nigeria (CBN), the official exchange rate closed at N1,405.62 per dollar on Monday, a decline from N1,393.26 recorded at the end of trading on Friday, March 6. This marks a drop of N12.36 in a single session, indicating renewed pressure on the local currency in the formal foreign exchange market.
Parallel market activity mirrored the downward movement. Multiple Bureau de Change (BDC) operators in Wuse Zone 4, Abuja, reported the Naira trading at N1,420 per dollar on Monday, weakening by N5 from the previous Friday’s rate of N1,415. The spread between official and parallel market rates remained a notable feature of the country’s dual exchange rate system.
This data points to a second consecutive week of Naira depreciation against the dollar, a pattern that persists even as Nigeria’s foreign exchange reserves grow. The CBN reported that gross reserves stood at $49.94 billion as of the previous Friday, a position that typically supports currency stability.
Analysts note that the divergence between accumulating reserves and a weakening Naira suggests underlying demand pressures in the forex market that outpace the central bank’s interventions. The continued depreciation has direct implications for import-dependent businesses and contributes to inflationary pressures, as the cost of imported goods and services rises.
The market’s reaction underscores the complex dynamics facing Nigeria’s monetary authorities. While higher reserves provide a buffer against external shocks, managing exchange rate stability requires balancing access to foreign currency for critical sectors with efforts to curb speculative demand and boost non-oil export earnings. The trajectory of the Naira in the coming weeks will depend on the CBN’s policy mix and the pace of dollar liquidity injection into the official market.
