The naira began the new week on a weak note, falling against the United States dollar at both the official and parallel (black) markets despite a slight increase in Nigeria’s external reserves.
Data from the Central Bank of Nigeria (CBN) showed that the local currency closed at ₦1,437.29 per dollar at the official market on Monday, down from ₦1,436.58 traded on Friday.
This means the naira lost ₦0.71 against the dollar in a single trading day.
Similarly, in the parallel market, where the dollar is traded unofficially, the naira weakened to ₦1,465 per dollar, compared to ₦1,450 on Friday. This shows a drop of ₦15 within the same period.
The latest movement indicates that the pressure on the naira has not eased, even as Nigeria’s foreign reserves recorded a slight rise.
According to CBN data, Nigeria’s external reserves rose to $43.35 billion as of November 7, up from $43.32 billion the previous day.
Analysts say the increase in reserves is a positive sign, showing that the country is earning more foreign exchange from oil sales and other inflows. However, the rise has not yet translated into strength for the naira.
Market watchers believe that several factors are putting pressure on the local currency, including high demand for dollars, limited supply in the official market, and continued dependence on imports for essential goods.
A Lagos-based financial analyst, Moses Ojo, explained that while the increase in reserves is encouraging, the demand side of the market remains strong.
“The naira is still under pressure because the demand for dollars is high and the CBN has limited capacity to meet that demand,” he said.
“Importers, travellers, and investors still rely heavily on the parallel market to get foreign exchange.”
The exchange rate has been one of Nigeria’s most pressing economic challenges in recent years.
In June 2023, the CBN introduced a unified exchange rate system, merging all official windows to allow market forces to determine the value of the naira. The reform was part of President Bola Ahmed Tinubu’s economic policy to attract foreign investment and stabilise the currency.
Initially, the move led to optimism among investors. However, it also triggered a sharp fall in the value of the naira, as the currency adjusted to reflect real market conditions.
The naira, which was trading around ₦460 per dollar before the policy change, crossed the ₦1,000 mark within months.
Although the CBN has taken steps to stabilise the market—such as clearing part of its foreign exchange backlog and improving dollar supply through oil earnings—the currency has continued to face volatility.
Apart from market forces, the naira’s value is also being affected by global economic trends and local political developments.
Reports last week indicated that the market reacted with uncertainty after U.S. President Donald Trump designated Nigeria as a “Country of Particular Concern” over alleged violations of religious freedom.
The development created anxiety among some foreign investors, who feared it could affect Nigeria’s access to international financing or bilateral relations with the United States.
Although the current U.S. administration has not confirmed any new sanctions, analysts say negative foreign news often puts additional pressure on the exchange rate by discouraging foreign inflows.
In addition, local businesses continue to face difficulties accessing foreign exchange from official sources. Many companies have resorted to the black market to fund imports, putting further strain on the parallel exchange rate.
Despite the latest dip, some traders remain hopeful that the naira could stabilise if oil prices stay strong and the CBN continues to manage liquidity in the market.
The central bank has recently introduced several measures to boost confidence, including allowing Bureau de Change (BDC) operators to return to the market under stricter supervision.
