The mixed performance of the naira in the foreign exchange market reflects the ongoing challenges in stabilizing the currency despite the Central Bank of Nigeria’s interventions.
The naira’s slight appreciation in the official market, from 1,603.78/$ to 1,599.94/$, shows some stability in the face of Central Bank interventions.
However, the significant depreciation in the parallel market indicates ongoing challenges, likely driven by demand pressures and limited supply in the informal market.
Cowry Asset Management Limited’s research suggests that the CBN continues its interventionist approach by executing weekly foreign exchange defense strategies.
“These efforts yielded modest results in the official market window, where the Naira appreciated by 0.24 per cent over the week, closing at N1,599.94 per US dollar on Thursday, compared to N1,603.78 the previous week.
“However, sentiment in the parallel market painted a more fragile picture. There, the naira depreciated significantly by 4.66 per cent week-on-week, ending the week at an average rate of N1,610 per dollar.
“This discrepancy between the official and unofficial market rates underscores the sustained demand pressure on the local currency, particularly from importers and informal market participants, who often struggle to access official FX channels,” said the weekly investors’ note.
The CBN had previously announced interventions in the FX market to alleviate liquidity shortages and ensure a more stable flow of foreign exchange.
Analysts expect foreign exchange pressures to ease gradually in the week, as the apex bank continues its weekly intervention efforts to stabilize the market.
“Looking ahead to the coming week, we anticipate a gradual easing of foreign exchange pressures as the Central Bank maintains its programme of weekly interventions.
“While volatility is expected to persist in the near term, consistent liquidity support could offer the naira a much-needed stabilising anchor, particularly if complemented by improved FX inflows and prudent fiscal coordination,” Cowry Asset Management Limited researchers explained.
Meanwhile, Governor Olayemi Cardoso of the Central Bank of Nigeria has reiterated the CBN’s strong commitment to transparency, consistency, and rebuilding public confidence through orthodox monetary policy reforms.
