Naira Suffers Sharpest Fall Since April as Dollar Strength Pushes Exchange Rate to N1,389/$
Nigeria’s currency came under renewed pressure on Wednesday, recording its sharpest single-day depreciation since April as the naira closed at N1,389 per dollar at the official foreign exchange market. According to data released by the Central Bank of Nigeria (CBN), the local currency lost N16 against the dollar from the previous day’s closing rate of N1,373/$, signaling a significant shift after weeks of relative stability.
The latest decline marks the weakest closing level for the naira since April 7 and reflects growing pressure from a strengthening U.S. dollar in global markets. Throughout the trading session, the naira fluctuated between N1,368 and N1,392 per dollar, while the weighted average exchange rate settled at N1,380.08. Market activity remained robust, with interbank turnover rising slightly to $125.59 million and the number of deals increasing from 106 to 126 transactions.
Financial analysts say the currency’s weakness is closely linked to developments beyond Nigeria’s borders. Mallam Muftau Yusuf, a financial economist at Kwik Securities Ltd, explained that higher U.S. yields have encouraged global investors to move funds into dollar-denominated assets, placing additional pressure on emerging and frontier market currencies. As a result, countries like Nigeria are increasingly feeling the impact of a stronger greenback despite domestic efforts to stabilize their exchange markets.
The naira’s recent performance highlights a sharp reversal from earlier gains recorded in June. The currency had strengthened to N1,356 per dollar on June 15 before gradually losing momentum over subsequent trading sessions. It closed at N1,369 on June 22, weakened further to N1,373 on June 23, and eventually slipped to N1,389 on June 24. The decline mirrors broader global trends, with the U.S. dollar index climbing to a 13-month high as investors reassess expectations for interest rate cuts amid persistent inflation concerns and a resilient American economy.
What makes the latest depreciation particularly notable is that it comes despite a significant improvement in Nigeria’s external reserves. The country’s foreign reserves recently surpassed $51 billion, their highest level since 2009, supported by stronger foreign exchange inflows and ongoing reforms introduced by the CBN. While the stronger reserve position provides some support for market confidence, analysts believe global economic conditions and dollar demand will continue to play a major role in determining the naira’s direction in the coming weeks.
source: nairametrics