Emmanuel OchayiThe naira weakened across different segments of the foreign exchange (FX) market on Wednesday as demand for the dollar increased among end users. Traders reported a surge in dollar purchases, which placed pressure on the naira, leading to depreciation in both the official and parallel markets.
Naira Depreciates in the Black Market
At the parallel market, also known as the black market, the naira closed at N1,525 per dollar on Wednesday. This represents a 2.6 percent loss, or N40 decline, from the N1,485 per dollar rate recorded on February 25, 2025. Compared to Tuesday’s rate of N1,510 per dollar, the naira depreciated by N15, reflecting a 0.98 percent loss.
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Traders attributed the decline to increased dollar demand, though the exact reason for the surge remained unclear. Some dealers noted that end users were actively buying dollars, contributing to the currency’s weakness.
Official Market Also Records Naira Depreciation
In the official foreign exchange market, the naira also lost value. The dollar was quoted at N1,500.80 per dollar on Wednesday, down by 0.6 percent or N9.13 from the previous rate of N1,491.67 per dollar. This depreciation was recorded on the Nigerian Foreign Exchange Market (NFEM), according to data from FMDQ Securities Exchange Limited.
Central Bank Data Reflects Naira Decline
The Central Bank of Nigeria (CBN) also reported a decline in the naira’s value. According to CBN data, the Naira traded at N1,505 per dollar on Wednesday, compared to N1,502 per dollar on Tuesday.
Authorised dealers in the official FX market quoted the dollar at a high of N1,505 per dollar on Wednesday, up from N1,503 per dollar on Tuesday. The lowest exchange rate recorded on Wednesday was N1,497.10 per dollar, slightly weaker than N1,490 per dollar on the previous day.
Traders Cite Increased Dollar Demand
Market participants expressed uncertainty about the exact cause of the naira’s depreciation but noted a rise in demand for dollars. A trader who spoke with Prime Business Africa confirmed that there was a slight increase in requests for the US dollar, which contributed to the pressure on the Naira.
The fluctuations in the FX market highlight the ongoing volatility of the naira, with changes in supply and demand continuing to influence its value. Experts suggest that continued monitoring of the market is necessary to understand the factors driving these fluctuations.
Outlook for the Naira
The recent depreciation in the naira raises concerns about future trends in the FX market. With increasing demand for the dollar, pressure on the local currency may persist. Analysts expect that market interventions by the CBN and government policies could help stabilise in the coming weeks.
The exchange rate remains a key indicator of economic stability, and further depreciation of the Nigerian currency could impact inflation and business operations in Nigeria. Stakeholders will be watching for policy responses to address the ongoing currency fluctuations.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
