The naira closed the week weaker at the official market, dropping by 1.25% to settle at ₦1,536.89 per dollar on Friday. This marks a continuation of its struggle to stabilize despite multiple Central Bank of Nigeria (CBN) interventions aimed at improving dollar liquidity across official channels.
According to data from the CBN, the currency opened the week at ₦1,528.03/$, already down from the previous session’s close of ₦1,517.93/$. It weakened further to ₦1,532.93/$ midweek, then recovered slightly on Wednesday and Thursday. However, by Friday, it resumed its decline to end the week at its lowest point.
Naira-for-crude deal stalls, creating uncertainty
The weakening of the naira coincided with reports that negotiations over the naira-for-crude oil supply deal between the Nigerian National Petroleum Company Limited (NNPC) and local refineries had stalled. This agreement was designed to ease pressure on dollar demand by allowing refineries to pay for crude in naira rather than foreign currency.
Sources within the sector revealed that while the talks haven’t been abandoned, the parties are expected to resume negotiations this week. The aim is to resolve sticking points and potentially extend the agreement to ensure a stable local supply chain.
In the meantime, Dangote Refinery, one of the key players in Nigeria’s downstream oil market, temporarily suspended its sale of petroleum products in naira. The refinery cited a “currency mismatch” as the reason, highlighting the challenges businesses face in a dual-currency system.
Oil market players warn of pressure on dollar demand
Following the Dangote Refinery decision, oil marketers and analysts warned that the suspension could place additional pressure on Nigeria’s FX reserves. Dealers now have to source large quantities of US dollars to purchase petroleum products, further intensifying demand for the greenback in the open market.
Industry observers argue that without a functioning local payment framework for crude, refiners will rely more heavily on the dollar, compounding existing FX imbalances.
CBN interventions continue, but structural issues remain
Despite the consistent interventions by the CBN, analysts note that supply-side issues and speculative activities continue to undermine naira stability. FX inflows into the Nigerian economy remain thin, largely due to subdued foreign investment and low oil receipts.
Experts at Cowry Asset Management explained that the recent CBN dollar sales to banks and Bureau De Change operators may only offer short-term relief. They stated, “Looking ahead, we anticipate a mixed outlook for the naira as demand pressures for the greenback intensify.”
Nevertheless, they believe the CBN will maintain its weekly interventions to avoid excessive volatility.
Parallel market offers slight relief
Interestingly, the naira appreciated at the parallel market, gaining ₦12 week-on-week to close at ₦1,568 per dollar. This represents a 0.77% gain, driven partly by reduced speculative trading and improved monitoring of illegal FX activities.
Researchers at Afrinvest also recorded a similar close of ₦1,565/$ at the parallel market. They predicted that the local currency would remain relatively stable in the coming week, citing the CBN’s sustained intervention strategy.
Reserves slip slightly as dollar sales continue
Meanwhile, Nigeria’s external reserves dipped slightly by 0.06%, falling from $38.37 billion to $38.35 billion as of Thursday. The drop reflects the ongoing efforts of the CBN to defend the naira amid low FX inflows.
Cowry Asset Management analysts attributed the decline to continued dollar interventions by the apex bank in the absence of robust export earnings or foreign investment inflows.
Global oil dynamics influence naira’s outlook
As an oil-dependent economy, Nigeria’s FX earnings are tightly linked to international crude prices. Last week, Brent crude oil prices rose by 3.0%, settling around $85.00 per barrel. The gains followed fresh U.S. sanctions against Iran and OPEC+’s decision to maintain oil production cuts until June 2026.
These developments could support Nigeria’s oil revenues in the short term. However, analysts warn that unless oil proceeds translate into actual FX inflows and are effectively managed, the naira may not benefit significantly.
Conclusion: Outlook remains uncertain without reforms
The naira’s performance last week underscores the fragile state of Nigeria’s currency market. While central bank actions offer temporary relief, market fundamentals—such as weak exports, low investor confidence, and policy uncertainty—continue to weigh heavily.
Until structural reforms take root, including a streamlined FX framework and diversified revenue base, the naira is likely to face ongoing pressure both at the official and parallel markets.
