Naira Depreciates 0.22% at Official Market as FX Demand Pressures Persist

The naira lost 0.22 percent against the dollar at the official foreign exchange market last week. It closed at N1,361.4 per dollar, reflecting sustained pressure from rising foreign exchange demand.

Parallel Market Gains Slightly

At the parallel market, the naira appreciated marginally to N1,365 per dollar. This suggests a slight improvement in supply conditions in the informal segment. The Central Bank of Nigeria continues its efforts to stabilise the naira and support liquidity.

External Reserves Drop

Nigeria’s external reserves declined by 0.06 percent to $48.33 billion. Analysts attribute the drop to persistent debt service obligations, weak oil revenue inflows, and foreign investor exits.

Global Oil Volatility Adds Risk

The forex market movement coincided with renewed volatility in global crude oil prices. Geopolitical tensions in the Middle East, especially around the Strait of Hormuz, have intensified. Market analysts say this uncertainty poses risks to Nigeria’s foreign exchange earnings and fiscal outlook. Crude oil remains a major source of dollar inflows.

Charles Abuede, a research analyst at Cowry Asset Management Limited, said the naira will remain under pressure in the near term. He cited persistent FX demand, ongoing central bank interventions, and lingering foreign portfolio outflows. Stronger oil receipts and improved foreign portfolio inflows could support the local currency and stabilise reserves in the coming weeks. He added that global oil prices are likely to stay highly volatile. The direction of prices depends on the durability of the Iran-U.S. ceasefire, OPEC+ production decisions, and the pace of global economic recovery.

Fixed Income Market Stays Bullish

Activities in the fixed income market remained bullish last week. Investors increased demand for treasury bills and other short-term government securities amid macroeconomic uncertainty and elevated yields. The Nigerian interbank treasury true yield curve trended downward across most maturities. Yields on the one-month, three-month, and 12-month tenors declined to 15.84 percent, 16.09 percent, and 18.92 percent respectively. The six-month tenor rose slightly by 17 basis points.

Average secondary market treasury bill yields declined by four basis points to 17.51 percent. Investors continued to position aggressively across maturities in expectation of sustained high returns.

At the Nigerian treasury bills auction conducted by the Debt Management Office, total subscriptions rose to N2.4 trillion compared to the N700 billion offer. This represents an oversubscription rate of 3.4 times. Final allotments settled at N731.8 billion. Stop rates on the 182-day and 364-day instruments eased marginally to 16.14 percent and 16.15 percent, reinforcing bullish sentiment.

The Central Bank of Nigeria’s Open Market Operations auctions also attracted overwhelming demand. At the Monday OMO auction, the eight-day bill recorded subscriptions worth N1.07 trillion against N300 billion offered, an oversubscription rate of 3.6 times. The 134-day tenor attracted N640.1 billion against the same offer size. At the Thursday OMO auction, total subscriptions rose to N1.64 trillion compared to N600 billion offered across the 33-day, 75-day, and 96-day maturities. Demand was concentrated on the 33-day and 96-day instruments, with oversubscription rates of 3.4 times and 4.6 times respectively.