SAT MAY 23 2026-theGBJournal| The naira depreciated by 0.8% week-on-week to close at N1,366.82 per US dollar in the official foreign exchange market, as robust demand for foreign currency outweighed liquidity support from offshore inflows linked to the Central Bank of Nigeria’s (CBN) Open Market Operations (OMO) auction conducted during the week.
The currency’s decline highlights the persistence of underlying demand pressures in the FX market, despite continued efforts by monetary authorities to attract foreign portfolio inflows and stabilize exchange rates.
The bearish sentiment extended across the forward market, where the naira weakened against the dollar across all major tenors.
The one-month contract depreciated by 0.2% to N1,397.27/USD, while the three-month and six-month forwards declined by the same margin to N1,436.18/USD and N1,492.56/USD respectively.
The one-year forward contract also weakened by 0.2% to N1,605.18/USD, indicating that market participants continue to price in gradual currency depreciation over the medium to long term despite ongoing policy tightening and liquidity management measures by the CBN.
However, Nigeria’s external buffers continued to strengthen, providing a positive backdrop for the foreign exchange market.
Gross external reserves increased by $315.90 million during the week to reach $48.89 billion as of May 21, 2026, marking the second consecutive week of reserve accumulation.
The sustained rise in reserves reflects stronger foreign currency inflows, improved oil receipts, and continued participation by offshore investors in domestic fixed-income instruments.
Analysts note that while the growing reserve position enhances the CBN’s capacity to intervene in the FX market and support currency stability, sustained improvement in foreign exchange liquidity and a moderation in demand pressures will be critical to reversing the naira’s recent weakening trend.
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