Naira Falls to N1,371/$ as Rising FX Demand and Global Oil Tensions Shake Nigeria’s Economy

Nigeria’s currency came under fresh pressure last week as the naira weakened slightly against the United States dollar, settling at N1,371.04/$ in the official foreign exchange market. The 0.7 per cent decline reflects the continued strain on Nigeria’s fragile FX market as businesses battle rising import costs and limited access to foreign exchange.

The local currency also depreciated in the parallel market, closing at N1,370.13 per dollar. The movement effectively narrowed the gap between the official and black market rates, a development analysts say highlights persistent pressure on dollar supply across the economy. Manufacturers, importers and airlines remain among the biggest consumers of foreign exchange, further tightening liquidity in the market.

Despite a marginal increase in Nigeria’s external reserves, which rose by 0.19 per cent to $48.54 billion, financial experts believe the improvement is too small to significantly stabilise the naira. Analysts warned that weak foreign investment inflows, low capital importation and Nigeria’s heavy dependence on oil revenues continue to expose the local currency to volatility and uncertainty.

Meanwhile, global oil prices recorded strong gains during the week as geopolitical tensions involving Iran rattled international markets. Brent crude climbed to $109.2 per barrel, while the United States West Texas Intermediate settled at $104.9 per barrel. Nigeria’s Bonny Light crude also surged nearly six per cent to close at $116.99 per barrel, offering temporary support for government revenues and external reserves.

However, economists cautioned that higher crude oil prices alone may not be enough to rescue the naira from sustained pressure. They noted that inflation concerns, weak investor confidence and increasing demand for dollars continue to outweigh supply in the FX market. At the same time, Nigeria’s fixed-income market remained bearish as investors adopted a cautious stance amid uncertainty over future monetary policy decisions and broader economic conditions.