By Chinwendu Obienyi
Owing to increased FX liquidity by the Central Bank of Nigeria (CBN), demand for FX momentarily cooled off on Monday, hence, the naira gained 0.95 per cent at the parallel market.
The naira had depreciated by 1.3 per cent at the official market to close at N1,537.50/$1 at the official market. It also fell to a new low of N1,590 in the parallel market following a shortage of dollars, the first time the naira depreciated to this level was on February 16, 2024. However, according to data compiled from street traders and online data collating platforms, the naira traded at N1,575, marking a N15 gain compared to N1,590 traded last week at the parallel market.
Commenting on the development, traders revealed that the demand for the dollar by end users moderated as the market witnessed calmness. At the weekend, analysts at Afrinvest Securities Limited said the naira depreciated on renewed dollar demand-supply imbalance after its depreciation for the week.
However, the country’s FX reserves received a boost as it increased by $12.06 million after a nine week decline to close at $38.36 billion as of March 12, 2025. Despite these gains, some analysts have warned that sustaining the appreciation will depend on consistent policy enforcement and external economic factors.
Specifically, Cordros Research noted that the growing concerns about oil receipts underpinned by lower oil prices are likely to temper net FX inflows from FPIs, likely to sustain pressure on the naira.
The firm added that nonetheless, the CBN’s sustained market intervention and reduced market distortions are expected to prevent a sharp depreciation of the naira. The apex bank’s Business Expectation Survey (BES) suggests that the naira will continue to appreciate in the coming months supported by increased business activity and confidence in its macroeconomic outlook.