The naira recent rally against the US dollar has hit a stumbling block, as renewed demand for the greenback pushed the local currency into decline across both official and parallel markets.
By the end of the past week, the naira slipped by 1.66 per cent to 1,517.24/$ in the official market, while the parallel market saw rates average 1,520/$.
In February, the naira recorded an 8.5% gain, closing at ₦1,490/$ in the parallel market and ₦1,500/$ in the official market.
Despite this, analysts remained optimistic about its performance in March—unless unexpected shocks disrupt the market.
Foreign Investors And Corporates Drive Depreciation
According to AIICO Capital Limited, foreign investors and local corporates increased their dollar demand, causing the naira to decline.
Likewise, CardinalStone highlighted that profit-taking by these investors eroded the effects of the Central Bank of Nigeria’s (CBN) interventions.
CBN’s Role In Stabilising The Naira
However, analysts at Cowry Asset Management argued that the CBN’s weekly dollar supply will determine the naira’s trajectory.
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Given that foreign reserves stand at $38.35bn, the central bank possesses the resources to stabilise the currency.
Uncertainty Ahead As Economic Pressures Mount
Furthermore, Afrinvest suggested that the naira could maintain its strength in March—provided that the CBN continues its interventions.
Yet, looming challenges such as rising inflation, shrinking reserves, and mounting debt threaten its stability.
Ultimately, the naira faces a tough battle as dollar demand intensifies, while the CBN struggles to support it.
The coming weeks will reveal whether it recovers or weakens further.
