Expert Explains as Naira Reverses Gain, Depreciates Against US Dollar
- Naira has depreciated against the US dollar across the FX market, reversing the gain achieved a day earlier
- Data shows that foreign exchange inflow has slowed following President Trump's military action threats
- Experts expect the naira to stabilise as the effects of Trump's comments are typically short-term
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The naira weakened across foreign exchange (FX) markets on Wednesday, November 5, following reduced liquidity and a slight uptick in demand for the dollar.
According to the Central Bank of Nigeria (CBN), the currency dropped 0.3% in Wednesday’s trading, with the dollar closing at N1,438.49, up from Tuesday’s N1,433.65 in the Nigerian Foreign Exchange Market (NAFEM).
Source: Getty Images
Naira performance
In the parallel or black market, the naira fell by N20, closing at N1,460 per dollar, marking a 1.4% decline from Tuesday’s N1,440.
Meanwhile, the daily rate for international transactions using the GTBank Naira card stood at N1,446 per dollar on Wednesday, slightly up from N1,443 the previous day
Despite the naira’s pressure, Nigeria’s external reserves continued to grow, reaching $43.27 billion as of November 4, 2025.
FG inflow drop
However, foreign exchange inflows through NAFEM slowed last week, falling to $1.04 billion from $1.37 billion the previous week, according to Coronation Merchant Bank.
The report indicated that foreign portfolio investors (FPIs) contributed the largest share, accounting for 62.3% ($645.40 million) of total inflows.
Exporters provided 15%, non-bank corporates 11.6%, foreign direct investments (FDIs) 1.9%, and other sources made up 9.2%.
The naira’s decline on Wednesday followed a volatile start to the week.
On Monday, the currency had dropped 1.0% in the official FX market after comments by former U.S. President Donald Trump targeting Nigeria triggered market uncertainty.
Source: Getty Images
Expert gives reason for naira fall
Ayokunle Olubunmi, head of Financial Institutions Ratings at Agusto & Co., attributed the naira’s earlier weakness to Trump’s remarks, which unsettled both currency and bond markets, BusinessDay reports.
He said:
“It’s not surprising, because even the bond market showed a dip. So yes, I think it’s largely due to Trump’s pronouncement."
Olubunmi noted that such reactions are not unusual, explaining that markets often respond sharply to political statements.
He added.
“The response in both the currency and bond markets was expected, considering they had already been under pressure following Trump’s comments."
He, however, expressed confidence that the market would stabilise, describing Trump’s statements as part of his typical political style.
Olubunmi said:
“The market will adjust because this is characteristic of Trump, he makes strong statements, causes some disruption, but things usually settle without major impact.”
FX reserves hit $43bn
Earlier, Legit.ng reported that the Central Bank of Nigeria (CBN) has revealed that Nigeria’s foreign exchange reserves rose to $43 billion.
This is the highest level FX reserves have reached in over 5 years.
A robust reserves position is vital for Nigeria’s economic stability.
Source: Legit.ng
