Naira ends week flat as reserves post 13-day losing streak

Nigeria’s naira closed a shortened trading week largely unchanged in the official market, even as the country’s external reserves extended a 13-day decline, underscoring persistent pressure on foreign-exchange buffers despite firmer oil prices and continued Central Bank support.

Data from the Central Bank of Nigeria (CBN) showed the naira appreciated slightly by N3.09 to N1,380.79 per dollar on Thursday, the last trading session before the Easter holiday, representing a 0.22 percent gain from N1,383.88 recorded a week earlier on the Nigerian Foreign Exchange Market (NFEM).

On a day-on-day basis, however, the currency weakened by N2.09, or 0.15 percent, from N1,378.70 per dollar on Wednesday, reflecting ongoing volatility in the market.

Across the four trading days, the naira posted a marginal gain of N2.79, or about 0.2 percent, from its Monday close of N1,383.58 per dollar, indicating relative stability over the period.

In the parallel market, the currency held steady at around N1,410 per dollar day-on-day on Thursday, narrowing the spread between official and street rates to roughly N30 from about N32 previously. On both a weekly and four-day basis, the naira strengthened modestly by N2 and N5 from N1,412 per dollar and N1,415 per dollar, respectively.

External reserves, which provide the Central Bank with ammunition to defend the currency, declined for the 13th consecutive session, falling by about $840 million to $49.18 billion as of April 1 from $50.02 billion recorded on March 11, according to Central Bank data.

The sustained drawdown comes against a backdrop of heightened global uncertainty tied to tensions in the Middle East, which analysts say have damped investor appetite for frontier markets and weighed on capital inflows.

Despite rising crude oil prices, the naira has yet to fully benefit from Nigeria’s status as an oil exporter. Analysts note that the currency weakened by an average of 1.80 percent in March, reflecting softer crude production levels and increased domestic allocation of oil to local refineries, a trend that may be constraining foreign-exchange inflows from exports.

Elevated global risk aversion, particularly linked to U.S.–Iran tensions, has also contributed to more cautious portfolio flows, with external pressures offsetting supportive inflows during the period.

Market activity further highlights the Central Bank’s active role in managing liquidity and exchange-rate stability. Analysts at FMDA estimate that the regulator sold about $700 million in the first two weeks of March, a move that likely contributed to the recent decline in reserves. The Central Bank typically operates on both sides of the market, buying and selling foreign exchange as part of its broader stabilisation strategy.

At the same time, reduced participation in money market instruments has added to pressure on reserves. Open Market Operations bill issuance stood at about N572.6 billion in the first half of March, while approximately N1.68 trillion matured over the same period, suggesting that a significant portion of funds was not rolled over.

Accirding to a report by FMDA, this imbalance may have triggered foreign portfolio outflows as investors converted matured proceeds into foreign currency and repatriated funds, further weighing on reserves. Additional factors, including external debt service obligations, are also likely to have contributed to the decline.

Central bank officials maintain that reserve movements are not linear and often reflect routine market operations rather than underlying fragility. The regulator has reiterated its readiness to intervene to curb volatility and ensure orderly functioning of the foreign-exchange market amid persistent global uncertainty.