Key Points

• Naira official exchange rate weakens under demand pressure.

• Dollar supply remains tight despite CBN injections.

• Market awaits fresh intervention to stabilize trading levels.

On Monday, the naira lost more value on the official foreign exchange market. It fell by ₦5.60 per US dollar to close at ₦1,448.0304. This was because there was still more demand for the greenback than there was supply.

Traders said the pressure was caused by companies, importers, and portfolio players who were still trying to buy dollars in order to get ready for new money flows. Even though the Central Bank of Nigeria tried to help many times, the official window’s liquidity stayed low, which kept the currency on the defensive.

The Central Bank’s data shows that the naira traded in a fairly narrow range of ₦1,440.00 to ₦1,450.25 per dollar during the day. This range shows that the currency is becoming more sensitive to changes in supply and demand.

People in the market say that the stability of that band also shows that they think the CBN may need to do more to keep volatility down in the next few days.

The official exchange rate for the naira shows more stress

AIICO Capital, an investment firm, said that the most recent drop in value was caused by strong demand for dollars from buyers looking to take advantage of the situation. This has continued even after the central bank’s injections.

Last week, the CBN sold $50 million into the market, but this didn’t change people’s minds or ease the pressure on the dollar to go up. Analysts say that because liquidity is still low, occasional injections are unlikely to lead to a long-term reversal without a broader policy change.

Still, Nigeria’s foreign reserves gave them some breathing room, going up by $105.1 million a day to $43.64 billion on November 14. The rise is a little reassuring, but analysts say that reserves could come under more stress if conditions around the world keep getting worse.

The lack of dollars makes FX more volatile

External markets made things even more uncertain. Prices for oil went down when Russia’s Novorossiysk export hub opened again after being closed for two days because of a Ukrainian drone strike. Brent crude dropped 0.47 percent to $64.07, and West Texas Intermediate dropped 0.30 percent to $59.77. The resumption of cargo loadings eased worries about supply, but it also showed how fragile energy markets are, as they are still sensitive to geopolitical shocks.

The official exchange rate for the naira causes market stress

Gold also fell slightly because the dollar got stronger and hopes for a U.S. interest rate cut next month faded. Spot gold fell 0.74 percent to $4,063 per ounce, and U.S. futures fell 1.46 percent to $4,020.04. Analysts think the precious metal will stay at the same price until the delayed U.S. economic data comes out later this week. Investors will be looking for any signs of what the Federal Reserve will do next.