The Nigerian naira opened the new trading week on a negative note, depreciating against the US dollar in the official market despite the country's foreign exchange reserves climbing to a six-year peak.
Official Market Performance
Data obtained from the Central Bank of Nigeria revealed that the naira closed at N1,442.43 against the US dollar in the Nigerian Foreign Exchange Market (NFEM) on Friday, November 14. This represents a marginal decline of 0.07% or 99 kobo from Thursday's exchange rate of N1,441.44/$1.
The currency showed mixed performance against other major currencies, remaining unchanged against the British pound sterling at N1,898.96/£1 while depreciating against the euro. The naira settled at N1,678.56/€1 compared to the previous day's rate of N1,674.96/€1.
Parallel Market Activity
In the parallel market, commonly known as the black market, traders reported mild demand pressure. Abdullahi, a Bureau de Change operator, provided insights into the market dynamics: "In the parallel market, we received some Dollar demand, but the rate remained unchanged at N1,455/$1 on Friday. However, this morning (Monday), I have seen a slight increase to N1,460/$1. Bulk buyers can still get the old rate."
Meanwhile, GTBank's foreign exchange window opened on Monday at N1,446/$1, indicating persistent pressure on the local currency.
FX Reserves Continue Upward Trend
Contrary to the naira's performance, Nigeria's external reserves maintained their steady growth, reaching $43.5 billion as of Thursday according to latest data. This represents an increase from $43.32 billion recorded the previous week and marks the highest level in six years.
The consistent build-up in reserves has been attributed to multiple factors including:
- Stronger crude oil revenue generation
- Improved non-oil inflow performance
- Tighter foreign exchange measures implemented by the Central Bank of Nigeria
Market analysts note that foreign exchange inflows have slowed in recent weeks, dropping from a peak of $1.37 billion to $899 million. This development, coupled with reduced frequency of Central Bank interventions, may have contributed to the naira's recent performance. The CBN did intervene last week with a $50 million injection into the market.
Market Outlook and Expert Projections
Traders and financial analysts anticipate that the strengthening reserves could alleviate pressure on the naira in the coming days, provided demand stabilizes. The current period typically experiences increased foreign exchange demand ahead of the festive season, creating additional pressure on the local currency.
Looking further ahead, Citibank African economist David Cowan projects the naira could weaken to between N1,650 and N1,700 by mid-2026. This outlook is linked to expected pressure driven by lower crude oil prices and a new monetary easing cycle anticipated from the Central Bank of Nigeria.
The naira's performance continues to be closely monitored by investors, businesses, and policymakers as Nigeria navigates complex economic challenges while maintaining growth in its foreign reserves.
