Nigeria’s currency posts a weekly loss against the US dollar as persistent demand for foreign exchange outweighs regulatory interventions

The Nigerian naira extended its losses at the official foreign exchange market last week, closing at N1,381.70 to the United States dollar despite continued efforts by the Central Bank of Nigeria (CBN) to stabilise the country’s foreign exchange market.

Also read: Naira slips slightly as dollar demand surges

Official data released by the CBN showed the local currency ended trading on Friday, 10 July, at N1,381.70/$1, representing a 0.85 per cent week-on-week depreciation.

The closing rate reflected a loss of N11.70 compared with the N1,370.00/$1 recorded on Friday, 3 July, marking the naira’s weakest weekly close during the period.

The Naira weakens story unfolded over most of the trading week, with the currency depreciating on four of the five trading days as sustained demand for foreign exchange continued to outweigh available supply.

The week began with a modest decline on Monday, 6 July, when the naira slipped by N1 to close at N1,371.00/$1.

Pressure intensified on Tuesday, with the local currency shedding another N8 to settle at N1,379.00/$1 as demand for dollars remained elevated.

The market found temporary stability on Wednesday, when the exchange rate remained unchanged at N1,379.00/$1, although trading was highly volatile.

During the session, the naira fluctuated between N1,376/$1 and N1,387/$1, reflecting continued uncertainty among market participants.

The respite proved short-lived. The currency edged lower to N1,379.25/$1 on Thursday before falling by a further N2.45 on Friday to close the week at N1,381.70/$1.

Trading activity remained robust throughout the week, according to figures from the Nigerian Foreign Exchange Market.

Total market turnover rose sharply from $220.18 million on Monday to a weekly peak of $504.67 million on Wednesday, suggesting stronger liquidity in the middle of the week.

Activity moderated to $298.92 million on Thursday, while Friday’s aggregate turnover had yet to be published in the CBN’s official data.

The interbank market followed a similar pattern. Transaction volumes increased significantly from $54.18 million on Monday to $208.09 million by Wednesday before easing to $71.04 million on Friday.

The latest depreciation comes despite a series of reforms introduced by the Yemi Cardoso-led Central Bank of Nigeria to restore confidence in the foreign exchange market.

Since assuming office, the apex bank has pursued a market-oriented exchange rate regime, unified multiple foreign exchange windows, tightened monetary policy through higher interest rates and cleared substantial verified foreign exchange obligations owed to investors and businesses.

The measures were designed to improve transparency, reduce arbitrage opportunities and attract foreign capital into the economy.

However, analysts say seasonal demand for foreign exchange, driven by import payments, overseas school fees and other international obligations, has continued to exert pressure on the naira.

Market observers noted that although improved liquidity during the middle of the week briefly supported trading conditions, demand for dollars continued to exceed supply at the official market.

They argued that while monetary reforms have strengthened confidence in the foreign exchange framework, sustained stability will depend on broader structural measures, including stronger non-oil export earnings, increased foreign direct investment and improved dollar inflows into the economy.

Also read: Naira shows strong resilience, gains against dollar in January

The latest performance underscores the continuing challenges facing Nigeria’s foreign exchange market as policymakers seek to balance exchange rate stability with wider economic reforms aimed at attracting investment and supporting long-term growth.