The naira closed the week on a weaker note across both official and parallel market segments, with analysts pointing to supply constraints and demand pressures in the foreign exchange market.
At the Nigerian Autonomous Foreign Exchange Market, the local currency shed recent gains to settle at N1,421.63 to the dollar from N1,417.94/$ in the previous week. The parallel market also reflected the pressure, with the naira falling to N1,487.00/$.
According to AIICO Capital, trading during the week was characterised by volatility within a relatively narrow range, largely shaped by supply-demand imbalances at the Nigerian Foreign Exchange Market.
“At the start of the week, the naira traded within a volatile but narrow band as supply-demand imbalances shaped movement at the Nigerian Foreign Exchange Market,” the firm stated in its weekly market report.
AIICO noted that the currency weakened by 16 basis points on Monday “as demand outpaced available supply” before staging a mild recovery on Tuesday, when “improved liquidity strengthened the naira by seven basis points and kept trading within the N1,418–N1,423 range, reflecting a cautiously stabilising early-week sentiment.”
However, by the close of the week, the naira had recorded a week-on-week depreciation of 26 basis points, equivalent to N3.68, to settle around N1,421.63/$, a move the firm attributed to “weaker supply levels”.
Despite the currency pressure, AIICO highlighted a positive development on the external buffers front, noting that Nigeria’s external reserves increased by $111.17m during the week to $46.01bn, which it said provided “additional confidence and buffered short-term pressures.”
Cowry Assets Management echoed similar sentiments, observing that the naira weakened across both market segments amid lingering structural challenges.
“The naira weakened against the U.S. dollar this week, falling 0.26 per cent in the official window to N1,421.63 and 0.72 per cent in the parallel market to N1,475, reflecting persistent demand pressures and structural FX imbalances,” Cowry Assets stated.
The firm also confirmed the marginal improvement in external reserves, which it said is “supported by steady oil receipts, stronger non-oil inflows, and a trade surplus.”
Looking ahead, analysts maintained a cautious outlook. AIICO said, “Barring any significant shift in supply, we expect the naira to trade within a similar range, supported by steady inflows and reserve accretion.”
Similarly, Cowry Assets projected continued pressure in the near term, noting that “the naira is expected to remain under pressure due to FX demand pressures and structural imbalances, though rising external reserves may provide some support.”
Overall, market watchers expect the naira to remain within a predictable range in the coming week, with movements largely dictated by FX supply conditions and liquidity dynamics in the official market.
