Dollar Scarcity Threatens Naira as CBN's $1.98bn Intervention Fails to Meet Demand
- Naira depreciated by 1.31% in October as dollar shortages and festive-season demand put pressure on the foreign exchange market
- CBN injected nearly $2 billion in October, but demand was fully met in only two of five interventions
- Businesses face higher import costs as the naira weakens, while the CBN says stronger dollar inflows are key to stability
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Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigeria's foreign exchange market is facing renewed pressure as dollar shortages threaten to erode the naira's gains, despite the Central Bank of Nigeria (CBN) injecting nearly $2 billion to support liquidity.
The development comes as importers, manufacturers and other businesses scramble for foreign currency ahead of the Christmas and New Year festivities, raising concerns about exchange-rate stability.
Source: Getty Images
The naira weakened in October after three consecutive months of appreciation, reflecting renewed pressure on the Nigerian Foreign Exchange Market (NFEM).
Official figures showed that the currency closed October 30, 2026, at ₦1,346.91 per dollar, compared with ₦1,329.50 at the end of September.
The movement represents a depreciation of approximately 1.31% in October, reversing part of the gains recorded between July and September.
CBN's $1.98bn intervention faces dollar demand
According to Daily Sun, the CBN injected approximately $1.98 billion into the foreign exchange market through five intervention exercises in October.
The transactions involved $430.6 million, $200 million, $950 million, $100 million and $300 million, bringing the total to $1.981 billion.
However, the report indicated that demand was fully satisfied in only two of the five exercises, representing a 40% success rate.
The remaining three exercises reportedly failed to meet all requests, highlighting persistent demand pressures despite the substantial dollar sales.
The figures suggest that central bank interventions alone may not guarantee sufficient liquidity when businesses compete for limited foreign currency.
Christmas imports increase pressure on naira
Analysts expect demand for dollars to intensify as businesses prepare for the festive shopping season.
Importers traditionally increase purchases of food products, electronics, clothing, beverages and household goods ahead of Christmas.
Manufacturers also require foreign currency to purchase machinery, raw materials and other production inputs.
This seasonal demand could worsen existing liquidity constraints, particularly if dollar inflows from exports, investments and remittances fail to keep pace.
Foreign investors seeking to repatriate earnings may further increase demand.
For Nigerian businesses, difficulties accessing dollars could delay imports, disrupt production and increase operating costs.
Consumers may ultimately face higher prices if exchange-rate pressures translate into more expensive imported goods.
Naira weakens further as November begins
The pressure has continued into November, with the naira trading at ₦1,347.94 per dollar on Monday, November 2, compared with ₦1,346.26 on October 30.
CBN figures also showed that interbank FX turnover declined by approximately 63%, from $58.85 million to $21.77 million, suggesting weaker trading activity at the beginning of the month, BusinessDay reports.
Meanwhile, parallel-market dealers quoted the dollar at approximately ₦1,385 to ₦1,390 on Tuesday, November 3, reflecting a continued premium over the official market.
Cardoso explains CBN's dollar market strategy
CBN Governor Olayemi Cardoso has maintained that the bank's long-term objective is to deepen market liquidity and reduce dependence on direct interventions.
According to him, average daily FX turnover has increased from approximately $100 million to $550 million, occasionally reaching $1 billion.
Source: Getty Images
He attributed the improvement to reforms promoting transparency, market confidence and more efficient foreign exchange transactions.
However, sustained stability will depend on stronger export earnings, foreign investment, diaspora remittances and other dollar inflows.
With festive demand approaching its peak, businesses and consumers will be watching whether the naira can withstand renewed pressure without another prolonged depreciation.
Fresh CBN dollar rate emerges
Legit.ng earlier reported that the Nigerian naira has suffered a fresh setback against the United States dollar, losing N27.12 within two trading days despite the country's external reserves rising to $55.16 billion.
Data from the Central Bank of Nigeria (CBN) showed that the local currency depreciated to N1,361.84 per dollar on Friday, October 23, 2026, compared with N1,334.72 recorded on Wednesday, October 21.
Source: Legit.ng
