By Emmanuel Olaitan
The Nigerian currency weakened further in the foreign exchange market on Thursday, as traders and analysts blamed persistent fiscal indiscipline and overlapping government budgets for mounting pressure on the naira.
At both the official and parallel markets, the local currency recorded losses against the United States dollar, reflecting heightened demand for foreign exchange amid concerns over policy coordination and public finance management.
Market participants said the depreciation was driven largely by uncertainty surrounding government spending patterns, particularly the practice of running multiple budget frameworks simultaneously, which they argue undermines fiscal credibility.
“The market is reacting to signals of weak fiscal discipline,” a Lagos-based currency trader said. “When you have overlapping budgets and inconsistent implementation, it creates uncertainty and puts pressure on the naira.”
Analysts also pointed to rising government borrowing and delayed revenue inflows as key factors eroding investor confidence. According to them, the disconnect between fiscal and monetary policies is complicating efforts by the Central Bank of Nigeria to stabilise the currency.
Despite recent reforms aimed at unifying exchange rates and improving liquidity, the naira has remained volatile, with demand for dollars continuing to outstrip supply.
Economic experts warn that without stronger fiscal coordination, including adherence to budget timelines and improved revenue generation, the currency could face sustained pressure in the coming months.
They also stressed the need for transparency in public spending and a reduction in off-budget expenditures, which often distort fiscal projections and weaken policy effectiveness.
The Federal Government has repeatedly pledged to enforce fiscal discipline and boost non-oil revenues, but traders say tangible progress remains limited.
As pressures mount, stakeholders are urging closer alignment between fiscal authorities and the Central Bank of Nigeria to restore confidence and stabilise the foreign exchange market.
