Naira Weakens As Foreign Investors Increase Dollar Demand Amid Stock Sell-Off

The naira came under renewed pressure at the Nigerian Foreign Exchange Market (NFEM) on Friday as heightened demand for the United States dollar outpaced available foreign exchange supply, leading to a slight depreciation of the local currency.

Market data showed that the naira traded within a band of N1,363 and N1,370 to the dollar during the session, reflecting persistent pressure in the foreign exchange market despite improved liquidity conditions earlier in the day.

Analysts attributed the currency’s weakness largely to increased demand from foreign portfolio investors exiting positions in the domestic equities market and converting proceeds into dollars for repatriation.

The sell-off by offshore investors, particularly in stocks considered overvalued after recent gains on the Nigerian Exchange, triggered additional demand for foreign currency and weighed on the naira’s performance.

Data from the Central Bank of Nigeria (CBN) indicated that some transactions at the official market were executed at rates as high as N1,374 per dollar, underscoring the pressure faced by the domestic currency.

The naira had initially strengthened during the trading session, appreciating to N1,356 per dollar following improved liquidity from inflows by foreign investors, exporters and non-bank corporate entities. However, the gains proved short-lived as demand pressure resurfaced later in the day.

The development also affected the performance of other major currencies against the naira. By the close of trading, the euro exchanged at N1,570.93, while the British pound traded at N1,814.10.

Market participants noted that the absence of significant intervention sales by the CBN during the session may have contributed to the currency’s inability to sustain earlier gains.

Interbank trading activity remained volatile, with daily turnover fluctuating sharply. CBN figures showed transaction volumes ranging between $39.99 million and $184.34 million, highlighting varying levels of market participation and liquidity.

Despite the temporary weakness of the naira, Nigeria’s external reserves continued their upward trajectory, providing a cushion for the country’s foreign exchange position.

Latest data from the apex bank showed that gross external reserves rose to $51.04 billion as of June 18, 2026, compared with $50.96 billion recorded a day earlier.

The steady accretion reflects sustained inflows from crude oil exports, diaspora remittances and other foreign exchange sources.

The growing reserve position has strengthened the CBN’s capacity to support market stability and meet legitimate foreign exchange obligations when necessary.

Many believe that the reserve build-up remains a key factor supporting investor confidence in Nigeria’s foreign exchange management framework, even as short-term market pressures persist.

Meanwhile, developments in the global oil market provided a mixed outlook for Nigeria’s external earnings.

Crude oil prices retreated during the week after the United States and Iran announced a preliminary agreement aimed at de-escalating tensions and reopening the Strait of Hormuz.

The development eased concerns about potential disruptions to global oil supplies and reduced the geopolitical risk premium that had supported prices in recent weeks.

For Nigeria, lower oil prices could moderate future foreign exchange inflows if sustained, although the country’s reserve position and ongoing reforms in the foreign exchange market are expected to provide some buffer against external shocks.

Market watchers believe the direction of the naira in the coming weeks will depend largely on the pace of foreign portfolio flows, oil market developments and the CBN’s liquidity management strategy as authorities seek to maintain stability in the foreign exchange market.