The naira has continued its downward trend, recording a weekly loss of N21.68 against the dollar in the official foreign exchange market. This loss comes despite modest gains in daily trading, as Nigeria's external reserves continue to decline. The naira closed at N1,380.58 per dollar on Friday, a 1.57 percent depreciation from N1,358.90 recorded the previous Friday.
The decline in the naira's value is attributed to a sustained decrease in Nigeria's external reserves, which fell to $49.48 billion as of March 26, 2026, marking a decline of $540 million from $50.02 billion recorded on March 11. The Central Bank of Nigeria (CBN) has introduced measures to improve liquidity and strengthen the FX market, including removing the cash pooling requirement for International Oil Companies (IOCs).
In a move aimed at boosting FX inflows, the CBN has allowed IOCs to repatriate 100 percent of their export proceeds immediately through authorised dealers' banks. Analysts anticipate that this move will enhance market competitiveness and attract more foreign investor participation. However, the pressure on the currency remains, with the naira weakening further in the parallel market to N1,415 per dollar on Friday.
The CBN's decision to remove the cash pooling requirement for IOCs is a welcome move, but its impact remains to be seen. The drop in Nigeria's external reserves is a cause for concern, and the government must take concrete steps to address this issue. The widening gap between the official and parallel market rates is a clear indication of the currency's instability. This instability has serious implications for everyday Nigerians, who are already grappling with the effects of inflation and economic hardship. The CBN must ensure that its policies are effective in boosting FX inflows and stabilizing the naira's value.
