by NIyi Jacobs
The Naira opened Friday’s session at N1,580/$ in the parallel market, recovering slightly from Thursday’s N1,590/$. However, the currency remains under intense pressure due to ongoing forex liquidity challenges and broader economic uncertainties.
Nigeria’s heavy reliance on crude oil for foreign exchange earnings makes the Naira vulnerable to global oil market dynamics. Concerns over weak demand, trade tensions between the U.S. and key trading partners, and OPEC+ production quota hikes are all weighing heavily on the currency.
The Association of Bureau de Change Operators of Nigeria (ABCON) has accused commercial banks of withholding foreign currency, deepening the forex scarcity. According to ABCON President Aminu Gwadabe, Bureau de Change operators are struggling with severe forex shortages.
The nation’s dependence on Foreign Portfolio Investment (FPI) inflows continues to face significant strain. Appetite for Nigerian one-year treasury bills remains weak despite the Central Bank of Nigeria’s efforts to boost yields, with one-year T-bill rates rising from 22.52% to 24.9% at a recent surprise auction. Demand, however, plummeted to N861 billion on Wednesday from N1.5 trillion earlier in the year.
Compounding Nigeria’s woes, militants have threatened to attack critical oil infrastructure over ongoing political disputes between the federal government and Rivers State concerning revenue allocation. The Trans-Niger Pipeline, a crucial crude transport route, suffered severe damage following an explosion that sparked a massive fire.
Despite the government’s ambitious target to boost oil production by 1 million barrels per day over the next two years, escalating security issues and declining forex inflows continue to erode investor confidence and worsen the Naira’s liquidity crisis.
