The Nigerian naira experienced significant depreciation in March, falling by 2.4% at the Nigerian Autonomous Foreign Exchange Market (NAFEM) window and 2.6% at the parallel market. The currency closed at N1,536.82/$ and N1,530.00/$ at these respective markets, despite substantial intervention from the Central Bank of Nigeria (CBN), which sold $668.8 million into the market. AIICO Capital’s monthly macroeconomic report attributed this weakness to persistent demand pressures, especially from foreign portfolio investors and local corporations.
AIICO Capital noted that despite the CBN’s efforts, including liquidity injections, the naira continued to face substantial pressure. By the end of March, the naira had depreciated by 2.97% month-over-month, and the parallel market showed similar trends, with a N43.50/$ drop. While there were brief moments of liquidity improvements due to CBN interventions, the demand for dollars consistently outstripped supply, contributing to the naira’s ongoing struggles.
The CBN acknowledged the challenges posed by global macroeconomic shifts, including new tariffs imposed by the United States. Despite these pressures, the bank has continued to intervene, recently injecting $197.71 million into the market on April 4, 2025. The CBN remains focused on maintaining market stability, ensuring adequate liquidity, and supporting the orderly functioning of the foreign exchange market, though analysts warn that external risks like US tariffs could exacerbate volatility in the near future.
Looking ahead, analysts project that the naira will continue to face challenges, with factors such as the termination of the naira-for-crude initiative and increased demand from importers and refineries contributing to heightened FX pressure. The broader global economic landscape, including oil price fluctuations and the US-China tariff conflict, adds further uncertainty, with risks of inflation and capital flight intensifying. The CBN’s ongoing interventions will be crucial in managing these pressures, but analysts remain cautious about the near-term outlook for the naira.
Source: punch