The naira depreciated by N9.68 against the dollar at the Nigerian Foreign Exchange Market (NFEM) on Thursday as heavy dollar demand prompted the Central Bank of Nigeria (CBN) to step up interventions, with reported sales reaching $800 million by early afternoon.
Latest data published by the CBN showed that the dollar was quoted at N1,344.40 on Thursday, compared with N1,334.72 on Wednesday, representing a 0.72 percent depreciation of the local currency.
In the parallel market, also known as the black market, the naira weakened by 0.29 percent to N1,377 per dollar on Friday from N1,373 the previous day.
Despite the depreciation, the gap between the official and parallel market rates narrowed to N33, or 2.46 percent, from N43, representing 3.23 percent previously.
Market developments also pointed to significant dollar demand, with the CBN reportedly selling $150 million on Wednesday and another $300 million on Thursday before increasing its intervention.
According to market information, the Central Bank sold $300 million at N1,345 before the market rate moved to N1,400. It subsequently sold another $500 million at N1,344, bringing reported dollar sales to $800 million by 1:30 p.m.
The scale of the intervention has raised questions about whether foreign portfolio investors (FPIs) are taking profits or withdrawing funds from the Nigerian market. However, analysts cautioned against interpreting the dollar sales as evidence of capital flight without a sustained trend in foreign exchange transactions and portfolio flows.
Ayodeji Ebo, chief executive officer of MDU Capital, said it would be premature to conclude that foreign portfolio investors were exiting based on two days of CBN dollar sales.
He said the demand could be driven by large, one-off transactions or import payments, while slightly lower fixed-income yields might be encouraging some portfolio managers to take profits after benefiting from attractive interest income and naira appreciation.
“Some profit-taking does not necessarily signal a broad investor exit,” Ebo said, adding that Nigeria’s external reserves remained a reassuring buffer.
He said market participants would need to establish whether the demand persisted and examine portfolio-flow data before drawing firm conclusions about the direction of foreign investment.
Similarly, Ayokunle Olubunmi, head of Financial Institutions Ratings at Agusto & Co., said a longer period of data was required to determine whether the CBN’s dollar sales reflected a sustained shift in market conditions.
“We need data over a relatively longer period before making a call,” Olubunmi said, noting that, as in any market, there were days when the CBN bought dollars and days when it sold them.
Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), also said the naira’s movement over two days was insufficient to establish a trend of capital-flow reversals.
Yusuf said the increased dollar demand could reflect unusual or heavy transactions rather than foreign portfolio investors exiting the market.
He argued that several weeks of trading data would be needed to determine whether portfolio flows were reversing, adding that Nigeria’s economic fundamentals remained intact, supported by external reserves and exchange-rate stability.
Yusuf also said he did not see a significant risk of capital flight in the absence of a major threat of policy reversals, while noting that concerns around fuel subsidy policy had featured in the debate.
The latest developments underscore the importance of distinguishing temporary demand pressures from a sustained reversal of foreign investment flows as the CBN intervenes to meet dollar demand and support stability in the foreign exchange market.
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Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.
