N1,417.94/$: Analysts Forecast This Week's Exchange Rate Movement as Naira Depreciates
- Naira recorded a slight depreciation in the official and parallel markets as FX demand continued to outstrip supply
- Analysts said the naira traded within a narrow band during the week, shaped by supply-demand imbalances
- Nigeria’s external reserves are on the rise, but structural FX pressures are expected to keep the naira under pressure
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The naira closed last week on a weaker note across both official and parallel market segments amid supply constraints and persistent demand pressures.
Analysis of the Central Bank of Nigeria data showed that in the Nigerian Foreign Exchange Market (NFEM), Nigerian currency settled at N1,421.63 to the dollar, down from N1,417.94/$ the previous week.
Source: Getty Images
It was the same movement at the parallel market also known as the black market, as the naira depreciating to around N1,487.00/$.
Analysts'rises insight on naira performance
Reacting to last week's forex market changes, Analysts at AIICO Capital said trading during the week was marked by volatility within a relatively narrow band, driven largely by imbalances between FX demand and available supply.
The firm noted that the naira weakened early in the week as demand outpaced supply, before recording a mild recovery on Tuesday on the back of improved liquidity.
AIICO said in its weekly market report:
“Trading remained within the N1,418–N1,423 range for most of the week, reflecting a cautiously stabilising sentiment.
"However, by the end of the week, weaker supply levels pushed the currency to a week-on-week depreciation of 26 basis points, equivalent to N3.68."
Despite the pressure on the currency, analysts pointed to a positive development in Nigeria’s external buffers.
AIICO noted that external reserves rose by $111.17 million during the week to $46.01 billion, providing some short-term support to the market.
Source: Getty Images
Cowry Assets Management also reported that the naira weakened across both market segments, citing lingering structural challenges in the FX market.
BusinessDay reports that the firm said the currency fell 0.26% in the official window and 0.72% in the parallel market, reflecting sustained demand pressures.
Cowry Assets added that the modest improvement in external reserves was supported by steady oil receipts, stronger non-oil inflows and a trade surplus.
Looking ahead
Both AIICO and Cowry Assets analysts struck a cautious tone.
AIICO said the naira is likely to trade within a similar range in the near term unless there is a significant improvement in FX supply, while Cowry Assets warned that structural imbalances could keep the currency under pressure, even as rising reserves offer some support.
Market participants expect movements this week to remain largely driven by FX supply conditions and liquidity dynamics in the official market.
Diaspora remittance rises by 20%
Earlier, Legit.ng reported that Nigeria has recorded a sharp surge in diaspora remittances, with inflows tripling over the past two months to about $600 million.
CBN Governor Olayemi Cardoso said the increase signals a notable improvement in the country’s foreign exchange position.
Speaking in São Paulo, Brazil, he explained that monthly remittance inflows have risen from around $200 million to $600 million and are projected to climb to at least $1 billion by the end of the year.
Proofreading by James Ojo, copy editor at Legit.ng.
Source: Legit.ng
