The naira weakened by 2.4% at the Nigerian Autonomous Foreign Exchange Market (NAFEX) and 2.6% at the parallel market in March, compared to the previous month. According to the latest Afrinvest Monthly Market Report titled ‘Analysing Global and Nigerian Economies & Financial Markets,’ the naira fell to N1,536.82/$ at the NAFEX window and N1,530.00/$ at the parallel market.
AIICO Capital’s March report also confirmed that the naira faced intense demand pressure, despite the Central Bank of Nigeria (CBN) intervening with $668.8 million in foreign exchange sales. The naira depreciated by 2.97% month-on-month, closing at N1,536.82/$ from N1,492.49/$ at the start of the month.
Demand remained high, especially from foreign portfolio investors and local businesses. The parallel market followed the same trend, with the naira losing about N43.50/$, reaching N1,536.00/$. Although liquidity improved mid-month due to CBN interventions, demand continued to outstrip supply.
Despite some improvement in the final week with a slight 0.5% appreciation, the naira remained under pressure. On a quarterly basis, the naira depreciated by 7 basis points at the NAFEX window, while external reserves dropped by about $110 million to $38.31 billion.
Looking ahead, AIICO Capital expects the CBN to continue stabilizing the naira in the short term, but global risks, such as U.S. tariffs and retaliatory measures, could lead to volatility and capital flight. The Central Bank of Nigeria also noted that the naira has been impacted by global macroeconomic shifts, particularly U.S. tariffs imposed by President Trump. To stabilize the market, the CBN injected $197.71 million through sales to authorized dealers in early April.
Despite the CBN’s efforts, the naira has experienced increased volatility in recent weeks, particularly as offshore demand surged amid weaker oil prices and global risk factors, including the U.S. tariff announcements. The naira depreciated by 1.97% week-on-week, closing at N1,567.02/$, while foreign reserves declined by $149 million to $38.15 billion.
Analysts at Afrinvest noted that the cessation of the naira-for-crude initiative could further intensify FX demand, particularly as refineries and importers increase their foreign currency needs. They expect the naira to remain under pressure in the near term, barring unforeseen events.
Cardinalstone also highlighted the negative impact of offshore investors’ flight to safety, contributing to domestic dollar demand and pressuring the naira. With crude production declining and oil prices contracting, concerns about meeting revenue targets and higher fiscal deficits persist.
Former Zenith Bank economist Marcel Okeke warned that the global tariff war, led by Trump, could trigger inflation, particularly affecting Nigeria due to its heavy reliance on imports, potentially leading to higher imported inflation.