The naira has extended its losing streak to a fifth consecutive day, plunging to its lowest point since March despite efforts by the Central Bank of Nigeria (CBN) to stabilize the currency amid high seasonal demand for dollars and lingering investor scepticism.
Closing at 1,577.29 per dollar on Monday, according to FMDQ, the naira’s decline from 1,563.8 on Friday underscores ongoing challenges despite the CBN’s sale of $122.7 million to local dealers between July 10-11.
Analysts, including Carlo Morelli of Azimut Investment SA, cite capital outflows and persistent doubts about the currency’s stability despite aggressive CBN efforts to tighten monetary policy and manage liquidity.
Since easing exchange controls last year, the naira has depreciated by approximately 70% against the dollar, making it the world’s second-worst-performing currency this year after the Lebanese pound.
Morelli emphasizes that restoring broader market confidence remains critical following earlier volatility that delayed stabilization, with foreign investors awaiting signs of sustained economic stability before committing to Nigeria.
With the CBN scheduled to announce its next policy decision on July 23 amid annual inflation accelerating to 34.2% in June, further interest rate hikes could be on the horizon to curb inflationary pressures and stabilize the naira.
Meanwhile, Nigeria’s foreign exchange reserves, bolstered by recent loans from the World Bank and African Export-Import Bank, stand at $35 billion as of July 8, their highest level since May 2023, supporting the country’s ability to manage external financial obligations.
Recall that Gbenga Olawepo-Hashim, a former presidential candidate and a member of the All Progressive Congress (APC), recently called on the Federal Government to abandon the free float of the naira against other currencies.
Olawepo-Hashim suggested reverting to the traditional managed float, emphasizing the need to allocate Nigeria’s forex and domestic resources for the nation’s economic and national priorities.
He argued that managing Nigeria’s foreign exchange regime based on the expectation that the market would correct itself is delusional, especially when various criminal gangs influence the market.
