Naira Slides Amid Intensifying FX Demand, Market Gap Narrows

The naira weakened against the US dollar in the foreign exchange market as rising demand for the greenback outpaced available supply.

FX spot data indicated that the Naira depreciated by 0.16% in the official window, closing at ₦1,530.52 per dollar. Similarly, the Naira ended the day at ₦1,580 per dollar in the parallel market.

This reduced the gap between the two markets to ₦50, despite sustained FX interventions by the Central Bank of Nigeria (CBN). The monetary authority has continued to enhance FX inflows by selling US dollars to authorized dealer banks.

Since the beginning of the year, the FX rate has shown relative stability, backed by intensified CBN efforts, a positive current account position, and increased foreign inflows.

However, risks persist as expectations of weaker global crude oil prices could impact Nigeria’s FX stability and drive inflationary concerns, according to a report by CardinalStone Securities Limited.

Analysts noted that Brent crude prices have fallen by 5.5% year-to-date, influenced by rising global crude supply expectations, policy adjustments, and declining demand.

Notably, the U.S. drive to boost oil production, often referred to as “drill-baby-drill,” has led the Energy Information Administration (EIA) to revise its 2025 crude production forecast to 13.61 mbpd, up from the previous estimate of 13.55 mbpd and the 2024 average of 13.22 mbpd.

Meanwhile, OPEC+ has reaffirmed its December 2024 decision to gradually phase out 2.20 mbpd in voluntary production cuts beginning April 1, 2025. CardinalStone noted that this development could further increase supply and exert downward pressure on oil prices.