Data from the Central Bank of Nigeria showed that the indicative exchange rate for the Nigerian Naira depreciated to N1,425 per dollar, down from N1,398 per dollar recorded at the close of trading last weekend. The movement represents a N27 decline in the value of the local currency in the official market.
Reversal After Weeks of Appreciation
The latest depreciation marks a reversal of the naira’s appreciation trend that began in mid-February. Since February 17, the currency had been strengthening and reached N1,337 per dollar early last week before gradually weakening again to N1,395 by the weekend.
Overall, the naira has lost N88 in value over the past three weeks in the official market.
Parallel Market Also Weakens
Pressure on the currency was also evident in the parallel market, where the naira depreciated to N1,410 per dollar, compared with N1,405 per dollar last Friday.
As a result, the gap between the official and parallel market rates widened to N15 per dollar, up from N7 per dollar recorded the previous weekend.
Middle East Tensions Drive Dollar Demand
Market analysts and industry sources attribute the renewed pressure on the naira to heightened global risk sentiment linked to the ongoing conflict involving the United States, Israel, and Iran.
According to a banking industry source, increased risk perception has prompted Foreign Portfolio Investors (FPIs) to exit Nigerian assets, leading to a surge in demand for dollars.
To stabilize the market, the Central Bank of Nigeria reportedly injected about $500 million into the foreign exchange market last week to help moderate the impact of rising demand from investors.
Analysts Cite Growing Currency Pressure
Analysts at Financial Derivatives Company said the naira’s decline reflects stronger demand for the U.S. dollar amid geopolitical tensions.
Similarly, analysts at Cowry Asset Management noted that the currency weakened across both official and parallel markets, highlighting broader pressure on Nigeria’s foreign exchange system.
According to the firm, the development underscores persistent volatility in the country’s currency market as global uncertainties continue to influence investor sentiment.