Naira slips to N1,349.50 despite $55.149bn reserves as FX turnover drops 15.15%

The naira came under fresh pressure on Wednesday, trading as high as N1,349.50 per dollar even as Nigeria's external reserves fell for the fifth straight day to $55.149 billion. CBN data showed dollar demand outpaced supply in the Nigerian Foreign Exchange Market, with foreign portfolio investor profit-taking adding to the volatility.

The official closing rate stood at N1,345.7983 per dollar, compared with N1,346.9348 in the previous session. That was a marginal appreciation of about N1.14. The currency traded between N1,346 and N1,349.50 per dollar during the session, reflecting demand from importers, businesses and other participants seeking foreign currency for international payments.

Turnover falls as transactions slow

Activity in the interbank foreign exchange market weakened. Total FX turnover declined by 15.15% to $100.929 million on Wednesday, from $118.957 million in the previous session. Completed transactions dropped to 97 from 117 on Tuesday. The lower volume suggested reduced market participation amid persistent demand for dollars to settle import bills, corporate obligations and other international transactions.

The pressure also followed profit-taking by foreign portfolio investors, which contributed to fluctuations in dollar availability. The CBN had previously injected about $1 billion into the foreign exchange market to address liquidity shortages and stabilise the currency.

Reserves extend decline

Gross foreign reserves fell to $55.149 billion, down from a recent peak of $55.264 billion, according to Market Forces Africa. The difference is a decline of about $115 million. Expectations of additional foreign currency inflows, particularly from crude oil earnings, could provide support for the naira.

The US Dollar Index declined by 0.43% to approximately 101.40, reflecting broader weakness in the American currency against major international peers. Earlier data showed the naira weakened to approximately N1,346 per dollar on October 30, compared with N1,329.50 at the end of September. That represented a depreciation of N16.50 and marked a setback for the currency, which had strengthened considerably between July and September.

What it means for businesses

For Nigerian businesses dependent on imported goods, persistent exchange rate volatility could complicate pricing decisions and increase uncertainty around replacement costs. Importers, manufacturers and consumers will be watching whether improved dollar inflows can sustain the naira's recovery.