The Nigerian naira fell to its lowest levels in almost a month despite external reserves climbing for the second consecutive week, fanning fears that the local currency may begin to be pressured on renewed appetite for the greenback.
The naira depreciated by 1.3 percent week-on-week to N1,610.50/USD up from N1,589.00/USD it closed earlier, even as the Central Bank of Nigeria intervened, selling $200.00 million to the market to limit upsides of tariffs and sliding oil prices on the unit.
Data obtained from the CBN showed that the naira was quoted at N1,629.93/$ as of 9th of April before it strengthened to N1,591.84 the next day, and has continued to fluctuate until it fell to its lowest in more than three weeks on Friday.
Last month, the naira slipped by more than 5 percent against the greenback, a situation that made it the second-worst currency globally, even as the apex bank reported that net reserves reached its highest in over three years.
That has ended the recent gains of the local currency which endured steep devaluations in 2023 and 2024 after President Bola Tinubu embarked on radical reforms to allow the naira to be more market driven and determined by fundamentals.
JP Morgan, a New-York based financial institution, said in a note last month that the decline in the naira has been “reasonable” when compared to its peers as well as more liquid markets, stating that the CBN would likely continue to intervene in the market to maintain the true value of the currency.
Meanwhile, gross FX reserves increased for the second consecutive week, growing by $86.67 million week-on-week to $38.10 billion as of 6th May 2025, effectively reversing its almost two-month declines.
Analysts at Cordros Research expect the pressure on the naira to continue in the near term given the global uncertainty. But see the now growing external reserves giving the currency the firepower to weather the storm.
“We believe the persistent global pressures will continue to pose downside risks to naira stability in the near term, given their impact on capital flows,” the Lagos-based research analysts wrote in a note to clients.
“Nonetheless, relatively stronger FX reserves should bolster the CBN’s capacity to manage excess naira volatility through sustained market interventions in the near term.”
