Naira Weakens as Demand Pressure Persists Despite Rising External Reserves

The naira posted a weaker performance over the past week, sliding by 0.99 per cent at the official Nigerian Foreign Exchange Market to close at ₦1,456.72/$ on Friday, compared to ₦1,442.43/$ the previous week. In the parallel market, the currency also softened, trading between ₦1,470/$ and ₦1,475/$.

Cowry Assets Management Limited noted in its weekly report that the naira traded within a wider range—between ₦1,440 and ₦1,460—at the official window, as reduced inflows met stronger dollar demand. By the end of the week, the currency had declined by 0.98 per cent to ₦1,456.72/$. A similar trend was recorded in the parallel market, where the naira dipped by 0.20 per cent to ₦1,475/$.

AIICO Capital also highlighted that the naira trended mostly bearish throughout the week, pressured by strong early demand from investors covering FX positions. The firm added that despite several interventions by the Central Bank of Nigeria, persistent high demand continued to weigh on the currency.

The broader FX market showed mixed signals, with sustained demand pressure dragging the naira lower across both official and parallel markets. This occurred even as Nigeria’s external reserves increased modestly to $44.19bn as of Thursday—up 1.26 per cent from $43.64bn recorded on November 14.

Cowry Assets attributed this growth in reserves to stable oil revenue, improved non-oil inflows, and a continuing trade surplus, all of which have supported the CBN’s efforts to maintain liquidity and market stability.

Looking ahead, analysts expect the FX market to remain steady yet cautious. Cowry Assets projects that the market will move in line with the consistency of inflows rather than speculative activity, warning that limited supply could continue to exert pressure unless inflows improve significantly. However, the ongoing build-up in reserves and continued CBN interventions are expected to help moderate volatility.

AIICO Capital maintains a positive short-term outlook, forecasting relative stability for the naira as reserves grow. Afrinvest shares similar sentiments, expecting the naira to trade