The Nigerian naira continued its downward slide in March, depreciating by 2.4% at the Nigerian Autonomous Foreign Exchange Market (NAFEM) and 2.6% at the parallel market, as mounting demand pressures and global economic uncertainty weighed on the local currency.
According to Afrinvest’s Monthly Market Report titled ‘Analysing Global and Nigerian Economies & Financial Markets’, the naira fell to N1,536.82/$ at the NAFEM window and N1,530.00/$ at the parallel market. This trend was confirmed by AIICO Capital, which attributed the sharp depreciation to rising demand, despite significant intervention by the Central Bank of Nigeria (CBN).
“The naira experienced significant depreciation in March 2025 due to persistent demand pressure in the (Nigerian) foreign exchange market,” AIICO stated in its March report.
“Despite the Central Bank of Nigeria intervening with substantial dollar sales totalling $668.8m, the naira weakened by 2.97 per cent m/m, closing at N1,536.82/$ from N1,492.49/$ at the start of the month.”
The report noted that demand was especially high from foreign portfolio investors and domestic corporates, pushing the parallel market rate down by N43.50/$. Even with CBN interventions mid-month that temporarily improved liquidity, supply failed to keep up with the surge in demand.
“In the final week, despite continued CBN dollar sales and a slight appreciation of 0.5 bps, the naira remained under pressure. On a quarterly basis, the naira depreciated by 7 bps q/q at the NFEM window. Meanwhile, external reserves fell by c.$110m to $38.31bn,” AIICO Capital added.
Looking ahead, AIICO projects continued intervention by the CBN, though it warned of heightened risk from ongoing global tensions.
“However, global risks—like US tariffs and retaliatory measures—may spur volatility and capital flight,” the report concluded.
Indeed, the Central Bank has acknowledged the influence of recent U.S. tariff measures introduced by President Donald Trump, which have rattled global markets and dampened investor confidence. In a statement signed by Omolara Duke, Director of the CBN’s Financial Markets Department, the bank announced a $197.71 million injection into the FX market on April 4.
“In line with its commitment to ensuring adequate liquidity and supporting orderly market functioning, the CBN facilitated market activity on Friday, April 4, 2025, with the provision of $197.71m through sales to authorised dealers,” the statement read.
“This measured step aligns with the Bank’s broader objective of fostering a stable, transparent, and efficient foreign exchange market.”
The CBN also reaffirmed its confidence in Nigeria’s FX framework, saying it is “designed to adjust appropriately to evolving fundamentals.” It reminded authorized dealers to strictly adhere to the Nigeria FX Market Code and maintain high standards in client dealings.
Despite interventions, the naira faced notable volatility in the first week of April. Initially trading between N1,525–N1,535/$, the rate weakened midweek as offshore demand surged. Following an OPEC+ supply hike, weakened oil prices and global investor jitters over U.S. trade policy contributed to the currency pressure. By Friday, the naira had slid to N1,567.02/$, down 1.97% week-on-week, while foreign reserves dropped by $149 million to $38.15 billion.
Afrinvest warned that the situation could worsen following the government’s halt of the naira-for-crude swap initiative. With the end of this program, analysts expect more refineries and petroleum marketers to enter the FX market, raising demand further.
“Against this backdrop, we expect the naira to remain pressured near-term, barring any unforeseen shocks,” the report said.
CardinalStone, in a macroeconomic update released Monday, added that the FX market continues to suffer from capital flight and increased domestic demand. The naira posted a -8.6% return in one month and -5.8% year-to-date.
“Some of the concerns relate to the risk of the government not meeting its revenue target and the higher deficit that could imply,” CardinalStone noted.
“Speaking to this risk, crude production declined to c. 1.67 mbpd in February (vs. 1.74 mbpd in January) amidst the material contraction in oil price (down by 14.2% YtD).”
Weighing the broader implications, Marcel Okeke, former Chief Economist at Zenith Bank, warned of potential global inflation triggered by the Trump administration’s trade war.
“We’re likely to see an uptick in imported inflation,” Okeke said, adding that Nigeria’s dependence on imports makes it particularly vulnerable to external shocks.
