Naira in Freefall: Massive Weekly Depreciation Against the US Dollar Shakes Official and Black Markets

 

The Nigerian foreign exchange market experienced a turbulent end to the final week of February 2026, as the Naira recorded a massive weekly depreciation against the US Dollar. Data from both the official Nigerian Foreign Exchange Market (NFEM) and the unregulated parallel market (black market) confirm that the local currency has surrendered its recent gains, sparking fresh concerns among businesses and consumers across the nation.

​As of Friday, February 27, 2026, the Naira's decline has been described by financial analysts as one of the most significant weekly pullbacks in recent months. This downward trend comes after a period of relative stability, highlighting the ongoing volatility within Nigeria’s FX landscape.

​The Official Market: Naira Slumps at the NFEM

​In the official window, regulated by the Central Bank of Nigeria (CBN), the Naira ended the trading week with a notable loss. According to market data, the local currency weakened by 1.25% week-on-week.

​The Dollar was quoted at N1,363.39 on Friday, a sharp contrast to the N1,346.32 recorded at the close of the previous week. This represents a total loss of N17.07 over the five trading sessions. The depreciation was steady throughout the week, starting from N1,349.24 on Monday and dropping progressively as demand for the greenback surged.

​The Black Market: Parallel Market Woes Deepen

​The situation was even more pronounced in the parallel market, popularly known as the black market. Traders in Lagos, Abuja, and Kano reported that the Naira took a significant hit, recording a weekly loss of N30.

​The currency closed the week at N1,370 per Dollar in the black market, a 2.19% decline from the N1,340 rate seen the previous Friday. Despite the volatility, the "gap" or spread between the official and parallel markets has notably narrowed to just N7. While a smaller gap is generally seen as a sign of market convergence, the fact that both rates are moving upward simultaneously indicates a systemic pressure on the Naira.

​Why is the Naira Depreciating Again?

​Several factors have been identified by experts as the drivers behind this latest slump:

1. ​Liquidity Management: Efforts by the CBN to manage liquidity in the system have moderated the recent rally the Naira enjoyed.
2. ​Increased Demand: As the first quarter of 2026 nears its end, there is a traditional spike in demand for Dollars by manufacturers and importers looking to replenish stocks.
3. ​Foreign Reserve Pressures: While the external reserves have seen growth earlier in the month, the immediate availability of FX for daily transactions remains a bottleneck.

​Market Convergence: A Silver Lining?

​One interesting takeaway from the week’s data is the narrowing exchange rate gap. At one point on Thursday, the difference between the official NFEM rate and the black market rate was only N11, closing even further to N7 by Friday. This suggests that the CBN's policy of allowing the official rate to reflect market realities is working, even if it results in a weaker Naira in the short term.

​Prior to this week’s pullback, the Naira had actually hit a two-year high of N1,335.96 in mid-February. The current depreciation is seen by some as a "market correction" following that rapid appreciation.

​Looking Ahead: What to Expect in March 2026

​As we move into March, all eyes will be on the Central Bank's next move. Will there be further interventions to provide liquidity, or will the market be allowed to find its own floor? For Nigerians, the immediate impact of this depreciation will likely be felt in the cost of imported goods, further challenging the 4.07% GDP growth momentum reported for the previous quarter.

​Businesses are advised to brace for continued volatility, while the government faces the uphill task of balancing exchange rate stability with the need for economic expansion.