The naira weakened against the dollar in the official foreign exchange (FX) market on Monday, while the volume of deals declined across market segments despite a sharp increase in turnover at the Nigerian Foreign Exchange Market (NFEM).
- +Naira cools despite spike in dollar market turnover
Data published by the Central Bank of Nigeria (CBN) showed that the naira depreciated by N11.77 as the dollar was quoted at N1,373.16 on Monday, representing a 0.86 percent loss compared to N1,361.39 recorded on Friday at the NFEM.
Data published by the Central Bank of Nigeria (CBN) showed that the naira depreciated by N11.77 as the dollar was quoted at N1,373.16 on Monday, representing a 0.86 percent loss compared to N1,361.39 recorded on Friday at the NFEM.
The number of deals executed at the NFEM declined by 15.29 percent to 277 on May 8, 2026 from 327 recorded in the previous session. However, turnover surged by 244.4 percent to $502.29 million on the same day, from $145.84 million recorded on May 7, 2026.
At the interbank segment of the market, trading activity also weakened. The number of deals dropped by 26.37 percent from 91 on Friday to 67 deals on Monday, while turnover declined by 26.98 percent to $51.17 million from $78.15 million.
In the parallel market, also known as the black market, the naira depreciated by N5 to close at N1,400 per dollar on Monday compared to N1,395 quoted on Friday. The spread between the official and parallel market rates narrowed to N27 per dollar from N34 recorded at the end of last week.
Nigeria’s external reserves, which provide the CBN with the buffer to support the local currency, remained broadly stable. Data on the apex bank’s website showed that reserves rose marginally by 0.06 percent to $48.36 billion as of May 8, 2026 from $48.33 billion recorded on May 5.
Meanwhile, total FX inflows into the Nigerian foreign exchange market declined for the second consecutive month in April, according to data from FMDQ.
FX supply fell by 30 percent month-on-month and 23 percent year-on-year to about $2.9 billion, reflecting weaker market liquidity amid heightened global risk aversion triggered by escalating tensions in the Middle East.
The softer FX liquidity conditions also dampened foreign investor appetite, as inflows from international sources weakened during the month.
“This development has dampened foreign investor appetite, as inflows from international sources weakened during the month,” analysts at Quest Merchant Bank said in a report.
Foreign portfolio inflows (FPIs) declined to $1.6 billion in April from $1.9 billion recorded in March. FPIs accounted for about 96 percent of total foreign inflows and approximately 55 percent of total FX inflows during the period.
Foreign direct investment (FDI) inflows also weakened significantly, falling by 79 percent month-on-month to $14.6 million from $54.5 million recorded in the previous month.
Analysts at Quest Merchant Bank noted that FDI inflows have remained persistently weak due to policy inconsistencies, security concerns, and a challenging business environment, which continue to weigh on long-term investor confidence.
On the domestic side, lower inflows from local sources further tightened FX supply conditions in April. Inflows from exporters, the largest domestic source of FX supply, declined by 11 percent month-on-month to $689.4 million.
Local non-bank corporates also remained a key source of FX liquidity, contributing $414.5 million during the month, although this was lower than the $506.8 million recorded in March.
CBN FX interventions stood at $103.8 million in April, significantly below the $691 million recorded in the previous month, indicating a more restrained presence by the apex bank in the FX market.
Despite the supply pressures recorded in April, the naira experienced only mild volatility compared to the previous month, averaging N1,361.51 per dollar against N1,381.18 per dollar in March, suggesting easing demand pressures in the market.
Analysts said the naira is expected to remain largely range-bound in the near term, supported by continued CBN interventions and stable domestic FX inflows.
They added that a quick de-escalation of tensions in the Middle East could improve global investor sentiment and revive offshore participation in Nigerian assets, particularly given the attractive carry trade opportunities in the market.
