The Naira has weakened to N1,550 against the American dollar in the black market amid increased demand for the greenback in West Africa’s largest economy.
The naira opened the week at N1,500 per dollar in the unofficial market and had stayed within that rate for more than two weeks before its recent low, despite the Central Bank of Nigeria’s (CBN) ongoing reforms in the Nigerian FX market.
However, according to CBN data, the Nigerian naira closed at N1,512 per dollar on the official market on Thursday.
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The managing director of Financial Derivatives Company Limited, Bismarck Rewane, claims that the naira’s recent weakness was caused by higher demand for foreign exchange than there is supply.
“Some adjustments are unavoidable when a currency is misaligned from its fair value,” he said. “This year, the misalignment is lower, and the path to balance will be less difficult than last year, when it reached 43%.”
The dynamics of the Nigerian foreign exchange market are still somewhat erratic. Foreign investors withdrew N455.62 billion from the Nigerian stock market in 2024, greatly exceeding all inflows, and escalating worries about investor confidence despite the Central Bank of Nigeria’s efforts to stabilize the naira.
Markets blamed this on the naira’s volatility, emphasizing that it led to uncertainty and that inflation also made the future unclear for international investors.
NGX data showed that although foreign transactions totaled N852.03 billion for the year, outflows contributed 53.47 percent of the total value, while inflows totaled N396.41 billion.
The haven currency fell nearly to a four-month low on Friday as investors waited anxiously for jobs data anticipated later in the day. U.S. tariff proposals increased uncertainty and raised fears about growth prospects for the world’s largest economy.
