The Nigerian Naira faced renewed pressure on Wednesday, December 17, depreciating against the United States Dollar in both the official and parallel foreign exchange markets. The decline is attributed to a significant slowdown in foreign currency inflows and the absence of immediate intervention by the Central Bank of Nigeria (CBN).
Official Market Sees Broad Depreciation
Data from the Nigerian Foreign Exchange Market (NFEM) revealed that the Naira lost value against the greenback, closing at N1,455.49 to one US Dollar. This represents a decline of N3.67, or 0.25%, from Tuesday's closing rate of N1,451.82/$1.
The local currency's weakness was not limited to the dollar. It also fell against the Euro, trading at N1,706.72/€1, down by 98 Kobo from the previous day. A minor gain was recorded against the British Pound Sterling, which strengthened slightly by 75 Kobo to N1,943.28/£1.
At the GTBank forex counter, the selling rate mirrored the downward trend, with the dollar quoted at N1,463, a N3 decline from the N1,460 rate of the prior day.
Parallel Market Adjusts Rates Upward
The situation was similar in the unofficial parallel market, where currency traders adjusted their rates upward in response to market dynamics. A trader, Abudullahi, confirmed the new selling prices to Legit.ng.
The US Dollar was sold at N1,487.01, while the British Pound and Euro traded at N2,204.40 and N1,853.70 respectively. The Canadian Dollar was quoted at N1,152.30.
The Central Bank of Nigeria also published its latest exchange rates for other global currencies, providing a snapshot of the Naira's standing:
- Euro: N1,706.72
- Pound Sterling: N1,943.24
- Yuan/Renminbi: N206.63
- CFA: N2.61
- South African Rand: N87.06
Key Factors Behind the Naira's Slide
Financial analysts point to a confluence of factors driving the depreciation. The primary issue is a notable reduction in US Dollar supply entering the market. Inflows from key sources like exporters, non-bank corporations, and foreign portfolio investors have thinned considerably.
This supply crunch is underscored by official data showing that weekly inflows into the NFEM dropped by 15% to $716.3 million, down from $844.7 million the week before.
Compounding the problem is the limited intervention by the Central Bank to inject liquidity and stabilize the rate. However, there is a silver lining: Nigeria's gross external reserves have grown to $45.47 billion, marking an 11.2% increase since the start of the year. This reserve buffer provides the CBN with potential firepower to support the Naira in the future.
The apex bank anticipates that increased foreign exchange spending during the "Detty December" festive period could help ease demand pressures, though high local prices may be curbing such expenditures.
Senate Approves CBN's Future Exchange Rate Projections
In a related development, the Nigerian Senate has approved the Central Bank's exchange rate projections for the coming years as part of the 2026–2028 Medium Term Expenditure Framework.
The approved framework anticipates an average exchange rate of N1,512 per US Dollar in 2026. The CBN forecasts a gradual strengthening thereafter, with projections set at N1,432.15/$1 in 2027 and N1,383.18/$1 in 2028.
Despite the current seasonal pressures, the CBN's ongoing management efforts are credited with maintaining the Naira within a relatively stable trading band, preventing more severe volatility in the foreign exchange market.
