The Nigerian naira closed out the last trading week on a weakened footing at the official foreign exchange market, experiencing a subtle depreciation of 0.14% week-on-week to settle at 1,532.34 per US dollar. This decline occurred in the face of robust efforts by the Central Bank of Nigeria (CBN) aimed at shoring up currency stability through market interventions.
At the start of the week, the naira had surged to a four-month high of 1,518.88/$. It subsequently dipped, touching 1,530.25/$ and then 1,533.11/$, before regaining marginal ground to close at its current level. Throughout the week, the official market recorded a high of 1,538/$ and a low point of 1,515/$ for the naira.
Meanwhile, the parallel (black) market presented its own volatility, with trades fluctuating between 1,535/$ and 1,544/$1. Analysts emphasized that the CBN’s interventions and improved foreign exchange (FX) liquidity have been instrumental in tempering instability, even as the divergent trading patterns reflect persistent supply-demand imbalances in the evolving FX landscape.
Cowry Assets Management Limited noted, “The divergent movements reflect ongoing supply-demand imbalances and the evolving FX liquidity landscape.” The report further expressed optimism, driven by improved oil production levels and firming global prices, suggesting that these factors are likely to support higher dollar inflows and help sustain the recent accumulation of reserves.
Recent statistics from the Nigerian Upstream Petroleum Regulatory Commission highlighted that average daily crude oil production (excluding condensates) increased by 3.6% to reach 1.51 million barrels per day in June, up from 1.45 million in May. This achievement marked Nigeria’s first meeting of its OPEC quota in five months, signaling noteworthy advancements in operational efficiency and security at key production sites.
AIICO Capital Limited reported that CBN’s regular FX interventions, alongside targeted dollar sales at critical moments during the week, played a vital role in preserving relative market stability. The naira’s close at 1,532.34/$, representing a drop of 13.6 basis points week-on-week, coincided with a $422m boost to national reserves, which rose to $37.85bn.
Given these conditions, the naira is expected to remain within its current band as market participants closely monitor outcomes from the upcoming Monetary Policy Committee (MPC) meeting. Analysts remain divided on the optimal stance for the MPC, with some advocating a modest rate reduction due to moderating inflation and nascent reform progress. Others urge caution against loosening policies prematurely, cautioning that it could undermine hard-won FX stability and inflation control amid ongoing external pressures.
A Comercio Partners assessment summed up market sentiment: “For now, traders are positioning around the edges, but the real signal will come from the tone of the communique.”
okay.ng reports that the nation’s economic watchers continue to view oil revenues and prudent central banking as key to safeguarding the naira’s near-term prospects.
