Naira Reverses Gains, Depreciates Against USD Amid Profit-Taking From Foreign Investors
- The Nigerian currency has suffered a losing week after being hit by investor activities in the FX market
- Data shows that the naira depreciated last week, both on the parallel market and the official market
- Analysts say the Central Bank of Nigeria must continue its intervention plans to sustain the earlier naira gains
Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
After weeks of sustained gains, the naira has depreciated against the United States Dollar in the past week.
This depreciation was seen in both the parallel and official markets. On the official market, the naira depreciated from N1,492.49/$ to N1,517.24/$.
On the parallel market, the naira depreciated to close the week at N1,570/$.
This depreciation reversed earlier gains seen in February when the naira closed at N1,500/$ on the official market and N1,490/$ on the parallel market, an 8.5% appreciation in the month.
Source: Getty Images
Analysts had predicted a positive trend in March, but according to the investor note from AIICO Capital Limited, the week witnessed an increased dollar demand.
The note explained that the demand came from local corporates and foreign investors on profit-taking moves.
The Friday daily market report from CardinalStone also corroborates this statement, explaining that the volume of dollars demanded due to profit-taking offset the CBN’s interventions, causing a depreciation of the naira.
CBN needs to support the naira
Analysts at Cowry Assets Management opined in their statement that the CBN may need to continue supporting the naira, as this could be the key determinant of the fate of the naira, week after week.
They believe that given the foreign reserve of $38.35 billion, the apex bank has the resources to provide this buffer.
Afrinvest made a similar statement in its Monthly Market Report, where it hinged the naira’s positive performance on the CBN’s continued USD supply to BDCs and DMBs and the absence of any adverse market shocks.
Recall that Nigeria still has a mounting debt, high inflation, and other factors threatening the naira's stability.
Source: UGC
Nigeria's FX reserves on the decline
Interestingly, Nigeria's foreign exchange reserves declined for the second consecutive month in February 2025.
Analysts stated that the speedy decline in the FX reserves may be directly connected to the CBN's efforts to stabilise the naira.
They noted that the situation calls for concern and action, especially given the importance of stable FX reserves to Nigeria's import-dependent economy.
Naira continues to fall despite CBN interventions
In related news, Legit.ng reported that the naira continues to fall against the Euro, US dollars and pounds, despite CBN interventions.
According to market traders, there was a double intervention by the apex bank on Friday to ease the pressure on the naira.
Despite this intervention, the naira closed the week worse off than the previous week. Data from the Central Bank of Nigeria showed that the Nigerian Foreign Exchange Market (NFEM) recorded a closing rate of N1,522.78 per dollar at the end of trading on Friday, March 7.
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Source: Legit.ng
