March 8, 2025
Both the official and parallel markets felt the negative impacts of US dollar scarcity, with demand rising faster than market supply. Spot data from the FMDQ platform revealed that the naira depreciated by 0.33%, closing at ₦1,517.24 per US dollar on Friday even as the Central Bank restarted FX sales to banks.
The scarcity reversed the recent past positive movements of the naira and plunged against the US dollar across the foreign exchange markets due to tight liquidity levels available at the supply side.
AIICO Capital Limited said in a note that “The naira depreciated this week due to tight dollar liquidity and increased demand from foreign portfolio investors and local corporates,”
The investment firm said offshore demand remained strong, pushing rates higher despite the CBN selling over $131.7 million in intervention sales, amounting to the second-largest single-day sale this year.
READ MORE; FX Transactions, Naira Exchange Rates Switch Positions.
According to the firm, the official foreign exchange market opened at ₦1,510/$ and saw heavy bids, driving the Naira to ₦1,540/₦1,560 by week’s end. Despite bond sell-offs, demand for FX remained high and was fueled by concerns over Brent crude levels.
According to AIICO Capital Limited, total market turnover reached $320 million, with some trades yet to be recorded, Overall, the Naira weakened by 1.659% week on week, closing at ₦1,517.24/$ as against ₦1,492.49/$ the previous week.
Market analysts said the CBN’s management of market supply will dictate currency movements. With reserves exceeding $38 billion, the CBN has sufficient resources to stabilize the currency. In the parallel market, the naira lost N70 to close at N1,570 per US dollar as supply side tightened.
