The naira also struggled in the parallel market, exchanging at N1,610/$1, up from N1,600/$1 on Wednesday. This modest spread of N5 between the official and parallel markets underscores persistent inefficiencies in Nigeria’s forex system, despite recent interventions by the apex bank.
Mounting Forex Pressures
The recent slide continues a trend seen since the Easter holiday, with the naira closing at N1,606/$1 on Tuesday. Analysts attribute the depreciation to a confluence of factors: low crude oil output, dwindling foreign inflows, and strong post-holiday demand for the greenback as businesses meet pending obligations.
“The pressure on the naira is not just seasonal—it’s symptomatic of deeper structural issues,” noted a Lagos-based financial analyst. “Until inflows increase significantly or demand is better managed, we’ll continue to see volatility.”
CBN’s Push for Reforms
Speaking this week at the Nasdaq MarketSite in New York, CBN Governor Olayemi Cardoso reaffirmed the apex bank’s commitment to rebuilding confidence in Nigeria’s economy. He pointed to a raft of ongoing reforms aimed at achieving macroeconomic stability and transparency in currency management.
“Our resolve is unwavering,” said Cardoso. “We’re pursuing a more orthodox monetary policy path, backed by consistent communication and reform-driven tools to stabilize the naira and control inflation.”
Over the past 18 months, the CBN has:
- Raised the monetary policy rate by 875 basis points to 27.5% to combat inflation,
- Injected hundreds of millions of dollars into the FX market to shore up the naira,
- Introduced the FX Code and EFEMS (Electronic Foreign Exchange Matching Systems) to enhance market transparency and boost investor confidence.
Outlook Remains Cautious
Despite the CBN’s efforts, the short-term outlook for the naira remains fragile. Market observers warn that foreign portfolio inflows are still sluggish, and domestic dollar demand remains robust. With oil output yet to recover significantly and remittances trailing expectations, many anticipate continued exchange rate volatility.
However, some analysts believe the reforms could yield results in the medium to long term if consistently applied.
“The CBN is clearly on a reform path,” one economist noted, “but stability in the FX market will only come when those reforms translate into tangible investor confidence and stronger dollar inflows.”
For now, the naira’s fate hangs in the balance—caught between policy optimism and market realities.