The naira is losing gains, dropping to ₦1,483/$ on Wednesday morning after remaining stable in late November, as importers and retailers are actively sourcing dollars to prepare for Christmas and New Year’s sales.
The naira weakened after the dollar was quoted at ₦1,454. 38/$ on Tuesday, compared to ₦1,448. 43/$ on Monday in the Nigerian Foreign Exchange Market (NFEM), according to data from the Central Bank of Nigeria (CBN).
Traders report that the market has been under mild but continuous stress as businesses front-loaded their foreign exchange obligations ahead of year-end.
The US Federal Reserve’s hawkish stance and high retail demand are also exerting pressure on the naira at the unofficial market, reversing recent stability.
Retail-level dollar purchases, especially in the parallel market, are being boosted by an increase in international travel reservations and overseas school fees.
A’ hawkish” Fed often maintains or signals higher interest rates for longer than markets expect to combat inflation rather than stimulate growth.
Consequently, investors find the US dollar (USD) more attractive, leading to capital outflows from frontier markets like Nigeria.
However, the Year-to-Date Performance shows that, thanks to interventions by the Central Bank of Nigeria (CBN), FX reforms, and diaspora remittances, the naira has appreciated by about 5.7% against the USD, stabilising in the ₦1,450–₦1,470/$ range since early December.
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