Market News

The naira weakened to a 17-day low of N1,380.71 per dollar in the official foreign exchange (FX) market as liquidity slowed, with turnover on the Nigerian Foreign Exchange Market (NFEM) dropping to zero.

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The last time the currency traded at a similar level was on April 2, 2026, when it closed at N1,380.79 per dollar, according to data from the Central Bank of Nigeria (CBN).

CBN data showed the naira depreciated by N16.47 in a single trading session to a weighted average rate of N1,380.71 per dollar on Tuesday, representing a 1.19% decline from N1,364.24 quoted on Monday at the NFEM.

On a week-on-week basis, the currency weakened by N30.68, falling from N1,350.03 recorded on Tuesday last week to N1,380.71, a decline of 2.22 percent. The sustained depreciation reflects tightening liquidity conditions and a slowdown in non-bank foreign exchange inflows.

In the parallel market, the naira remained stable at N1,400 per dollar, holding at the same level recorded since last week. The gap between the official and parallel market rates narrowed to N20 on Tuesday from N36 the previous day.

The latest trading session underscores mounting pressure in the FX market. NFEM turnover dropped to zero with no deals recorded on Tuesday, compared to $276.7 million across 241 deals on Monday. In contrast, interbank turnover rose to $98.83 million with 78 deals, up from $76.65 million across 79 deals recorded a day earlier, indicating that trading activity was largely confined to banks.

Market participants say this shift points to a sharp decline in participation from exporters and other autonomous FX sources, leaving the market increasingly dependent on interbank flows.

“The absence of non-bank supply typically signals tighter FX conditions,” a trader said. “When liquidity thins out like this, rates adjust quickly.”

The weighted average exchange rate has risen steadily over the past week, from N1,349.67 on April 20 to N1,380.71, highlighting persistent demand pressure in the market.

Earlier in the week, the naira showed signs of relative stability, trading around N1,348.45 on April 22 before weakening to N1,355.00 and N1,361.50 on April 23 and 24 respectively. The pace of depreciation picked up on April 27, when the rate climbed to N1,364.24 alongside increased turnover, suggesting stronger demand for foreign exchange.

Market volatility has also intensified. On April 28, the currency traded within a wider band of N1,367.50 to N1,385.00, compared to narrower ranges earlier in the week, reflecting heightened uncertainty among participants.

Nigeria’s external reserves, which provide the CBN with buffers to support the naira, have continued to decline, falling to $48.39 billion as of April 27, 2026, from a peak of $50.02 billion recorded on March 11, 2026, according to data on the apex bank’s website.

Deal activity further highlights uneven market conditions. While interbank transactions remained relatively active, overall market participation weakened significantly, reinforcing concerns about declining liquidity.

The trend is consistent with periods when autonomous inflows weaken and the FX market becomes heavily reliant on bank-driven transactions.

External factors are also adding pressure. Rising global energy prices and ongoing geopolitical tensions are increasing demand for dollars, particularly for fuel imports.

According to the World Bank’s latest commodity markets outlook, energy prices are projected to rise by 24% this year to their highest level since Russia’s invasion of Ukraine in 2022, as the Middle East conflict disrupts global supply chains. Overall commodity prices are expected to increase by 16 percent in 2026, driven by higher energy and fertiliser costs as well as record prices for key metals.

Olayemi Cardos, governor of the CBN has set a target of $1 billion in monthly remittance inflows by year-end, up from about $600 million currently, as authorities seek to deepen formal FX channels. Measures including enabling Bank Verification Numbers for Nigerians abroad and integrating international money transfer operators are aimed at reducing frictions and boosting inflows.

For now, market data points to sustained pressure, with declining liquidity and rising demand continuing to weigh on the currency.