The Nigerian naira continued its decline against the US dollar across foreign exchange markets on Tuesday, despite the Central Bank of Nigeria’s (CBN) ongoing efforts to stabilize the currency. Demand for dollars surged, exacerbating pressure on the naira as weekly forex inflows dropped by 25% in the official market.
According to AIICO Capital Limited, the CBN intervened by selling over $44.75 million at rates between N1,522.70 and N1,531. However, this was not enough to curb depreciation, as the exchange rate fluctuated between N1,522.70 and N1,549.50 before settling at N1,532.93.
Data shows that total FX inflows into Nigeria’s autonomous foreign exchange window fell from $1.34 billion to $1 billion within a week. Meanwhile, the CBN increased its total forex sales to $543.20 million for the week, according to TrustBanc Financial Group Limited.
Over the past six days, the CBN has injected approximately $590 million into the banking system to ease pressure on the naira. However, dwindling FX reserves— now at $38.4 billion— have raised concerns about the sustainability of these interventions. The parallel market saw the naira trading at ₦1,580 by the end of Tuesday.
Meanwhile, external factors such as global oil prices added another layer of complexity. Crude oil prices remained near a two-week high amid geopolitical tensions in the Middle East, fueling fears of supply disruptions. Brent crude edged up to $71.32 per barrel, while West Texas Intermediate (WTI) crude settled at $67.75 per barrel.
Nigeria’s fiscal outlook remains under strain as crude oil production dipped by 3.77% month-on-month to 1.67 million barrels per day (mbpd) in February, down from 1.74 mbpd in January. The decline affected key terminals, including Forcados (-12.53%), Bonny (-21.81%), and Qua Iboe (-7.63%).
The drop in production has been linked to operational issues, pipeline leaks, and crude theft. Despite hitting a peak of 1.7 mbpd during the month, Nigeria’s output remains below its 1.5 mbpd OPEC quota.
Looking ahead, government efforts to combat oil theft and improve infrastructure may help boost production. However, if oil prices weaken further, Nigeria’s fiscal deficit could widen, posing additional economic challenges.
Gold prices, on the other hand, soared past the $3,000 mark, reaching a new record of $3,038.26 per ounce before settling at $3,031.22. Investors rushed to gold as a safe-haven asset amid uncertainty over U.S. trade policies and rising geopolitical tensions. The Organisation for Economic Co-operation and Development (OECD) has warned that U.S. tariffs could slow down economic growth in North America while dampening global energy demand.
With multiple economic factors at play, the naira’s stability will largely depend on how the CBN navigates forex interventions, rising inflation, and dwindling external reserves in the coming weeks.
