Naira Struggles Below N1,550/$ Amidst Forex Market Uncertainty
The Nigerian naira continues to hover below the N1,550 per dollar mark in the unofficial market, as strong demand for the U.S. dollar persists.......➡️CONTINUE READING THE FULL ARTICLES HERE.
Despite the Central Bank of Nigeria’s (CBN) efforts to boost its foreign exchange reserves, market analysts say that the local currency remains unable to break the N1,200 resistance level due to ongoing fragility in the foreign exchange (FX) market.
Crude oil production, Nigeria’s primary revenue source, remains low and stagnant, further compounding the challenges.
This suggests that the CBN’s recent measures to stabilize the naira have been insufficient to halt its persistent depreciation.
Economists warn that the local currency will face additional selling pressure as demand for foreign exchange rises, particularly for foreign tuition fees, overseas travel, and fuel imports.
A significant factor weighing on Nigeria’s forex liquidity is the ongoing delay in finalizing the naira-for-crude agreement between the Nigerian National Petroleum Company Limited (NNPCL) and Dangote Refineries.
The negotiations, originally expected to conclude on Monday, have now been postponed by several weeks, raising concerns among market participants.
The proposed agreement is designed to allow domestic refiners to purchase crude oil using the naira instead of U.S. dollars.
Financial analyst Tunde Bakare expressed concerns over the implications of the delayed deal: “The naira-for-crude policy was expected to ease forex demand and support local currency strength. This postponement means the pressure on fore reserves will persist, keeping the naira under strain.”
Despite the CBN reporting Nigeria’s net foreign exchange reserves at $23.1 billion in 2024—the highest level in over three years—the naira remains under pressure.
This improvement in external liquidity, alongside reduced short-term obligations, has not been sufficient to restore market confidence fully.
CBN’s forex reserve figures indicate a significant recovery from previous years, with reserves standing at $3.99 billion at the end of 2023, $8.19 billion in 2022, and $14.59 billion in 2021.