By Favour Pius
The naira depreciated across foreign exchange markets this week after the Central Bank of Nigeria concluded its 304th Monetary Policy Committee (MPC) meeting, as sustained demand for dollars and cautious investor sentiment outweighed monetary policy support.
The local currency came under renewed pressure at the official window and parallel market, reflecting persistent foreign exchange demand from importers and limited hard currency inflows, despite the apex bank’s decision to maintain its current monetary policy stance aimed at stabilising prices and restoring investor confidence.
Data from the FMDQ Securities Exchange Limited showed the naira weakened week-on-week at the Nigerian Autonomous Foreign Exchange Market (NAFEM), amid increased demand from corporates and offshore investors seeking to repatriate funds.
Market analysts said the MPC’s decision to hold rates signalled policy caution but fell short of triggering immediate confidence strong enough to reverse foreign exchange pressures.
Analysts at Cordros Capital noted that the naira’s weakness reflected structural imbalances between foreign exchange supply and demand, stressing that sustained currency stability would depend more on improved dollar inflows than interest rate adjustments alone.
“The MPC’s decision reinforces the CBN’s commitment to price stability, but FX liquidity conditions remain the dominant driver of exchange rate movements,” the firm said in a market note.
Similarly, currency traders and Bureau De Change operators attributed the depreciation to increased demand from manufacturers and import-dependent businesses seeking to settle international obligations.
Economic experts at Financial Derivatives Company said the foreign exchange market remains vulnerable to external shocks, capital flow volatility, and fluctuating oil receipts, which continue to influence dollar availability.
They noted that while elevated interest rates could attract portfolio inflows over time, immediate exchange rate stability would require stronger oil production, improved non-oil exports, and consistent foreign investment inflows.
Industry operators also warned that continued depreciation could worsen inflationary pressures by raising the cost of imported goods, energy, and industrial inputs.
Analysts at FSDH Merchant Bank said exchange rate stability remains critical to Nigeria’s broader macroeconomic outlook, particularly as the country seeks to sustain investor confidence and support economic recovery.
Despite the current weakness, financial experts said the MPC’s decision reflects the apex bank’s balancing act between controlling inflation and supporting economic growth, noting that exchange rate stability would ultimately depend on stronger foreign exchange earnings and improved market liquidity.
For Nigeria, the naira’s performance in the coming weeks will likely be shaped by foreign portfolio inflows, oil revenue dynamics, and continued policy interventions by monetary authorities seeking to stabilise the currency and restore market confidence.
