Nigeria’s currency came under renewed pressure on Monday as the naira weakened to N1,425 against the U.S. dollar in the official market, marking its lowest level in about two months. The decline followed a surge in demand for foreign currency, a situation analysts link to growing uncertainty in the global environment driven by the ongoing tensions in the Middle East.
Figures released by the Central Bank of Nigeria showed that the indicative exchange rate moved from N1,398 per dollar recorded at the close of last week to N1,425, representing a drop of N27 for the local currency within a short period. The development signals a shift from the recent appreciation the naira had enjoyed in the official window since mid-February.
For several weeks, the currency had strengthened steadily, reaching around N1,337 per dollar early last week before the momentum slowed. By the end of that week, the rate had slipped to about N1,395 per dollar, setting the stage for the sharper depreciation now being recorded. Over the past three weeks alone, the naira has lost a cumulative N88 in value.
The pressure was not limited to the official market. Activity in the parallel market also reflected the strain, with the naira weakening slightly to around N1,410 per dollar compared to N1,405 recorded the previous Friday. As a result, the gap between the official and parallel markets widened to N15 per dollar, up from N7 just days earlier.
Findings by Zoyols indicate that the latest slide in the currency is closely tied to heightened demand for dollars by foreign portfolio investors seeking to move funds out of the country. Many of these investors are reportedly adjusting their positions as geopolitical risks increase following the escalating conflict involving the United States, Israel, and Iran.
Sources within the banking sector revealed to Zoyols that the Central Bank stepped into the market last week with an intervention estimated at about $500 million. The move was aimed at easing pressure in the foreign exchange market and stabilizing the naira as demand for dollars from exiting investors intensified.
Market analysts say the situation reflects the ripple effects of global tensions on emerging markets. According to financial analysts who spoke with Zoyols, demand for the U.S. dollar has climbed as investors look for safer assets amid growing uncertainty tied to the Middle East crisis.
Another group of market analysts noted that the naira weakened across both the official and informal exchange markets, showing that pressure on the currency is being felt across different trading segments. They explained that the shift highlights the broader impact of global developments on Nigeria’s foreign exchange environment.
