Naira Slips Marginally Against Dollar Despite Reserve Rise to $48.72bn
By Aboki Forex —
The naira depreciated slightly against the dollar last week, losing 0.32 percent week on week to close at N1,375.46 in the official market. This happened even as Nigeria’s external reserves rose to $48.72 billion, highlighting a mix of persistent foreign exchange demand and modest reserve gains.
In the parallel market, the naira also weakened by 15 basis points to N1,370 per dollar. The narrow gap between both market segments points to broad alignment, though liquidity constraints remain.
The currency’s movement shows ongoing tension between demand pressures and policy efforts to stabilise the naira. Recent monetary tightening by the Central Bank of Nigeria has helped curb extreme swings. But traders still face challenges from irregular dollar inflows, import demand and shifting investor sentiment.
The marginal increase in external reserves, up 0.05 percent week on week, offers some reassurance. It provides a buffer that could support the naira in the near term.
Nigeria’s Bonny Light crude fell 5.99 percent to $116.92 per barrel. The decline reflects grade-specific pricing and demand conditions in the global crude market, even as broader oil benchmarks rose.
Analysts expect the naira to stay under mild pressure in the short term. Persistent FX demand and structural liquidity issues are the main drivers. But the gradual build up in reserves should help cushion sharp volatility, even as broader macroeconomic uncertainties persist.
Meanwhile, the Nigerian secondary bond market traded bearish all week. Weak investor demand and widespread selloffs followed the Central Bank’s decision to hold its policy rate. Average yields rose 17 basis points week on week to 16.28 percent, reflecting tighter sentiment in the debt market.
Market activity remained muted. Investors adopted a defensive stance due to high interest rates and liquidity constraints. The combination of restrictive monetary conditions and uncertainty about policy direction weighed on demand, especially for longer dated bonds, as buyers demanded higher returns for risk.