Naira Under Pressure: Nigerian Currency Records Three Consecutive Days of Depreciation Against US Dollar ~ 9jaSonic

The Nigerian foreign exchange market has entered a period of heightened volatility, with the local currency, the Naira, recording its third consecutive day of depreciation against the US Dollar. As of February 25, 2026, data from the Nigerian Autonomous Foreign Exchange Market (NAFEM) shows a troubling trend for the national currency, as it struggles to find a stable floor amidst fluctuating demand and supply dynamics. This downward streak has sparked fresh concerns among manufacturers, importers, and the general public, as the cost of doing business continues to climb in tandem with the rising value of the greenback.

The Numbers: A Three-Day Decline

The recent slide of the Naira is not just a singular event but a consistent trend over the last 72 hours of trading. On the first day of the slide, the Naira saw a marginal drop, but by the close of business on Wednesday, February 25, the depreciation had accelerated.

Opening Rate: The Naira began the week with a sense of cautious optimism, trading at a relatively stable rate.
The Closing Figure: By the end of the third day, the Naira closed significantly lower at the official NAFEM window, marking a clear departure from the gains recorded in previous weeks.
Volume of Trade: Interestingly, while the value of the Naira dropped, the daily turnover—representing the total amount of dollars traded—showed significant activity, suggesting that while dollars are available, the demand is vastly outstripping the current supply.

Factors Driving the Depreciation

Financial analysts point to several macroeconomic factors that are putting the Naira on the defensive. The primary culprit appears to be the liquidity crunch in the official window. Despite efforts by the Central Bank of Nigeria (CBN) to provide consistent dollar interventions, the backlog of demand from foreign portfolio investors (FPIs) and local manufacturers remains substantial.

Another critical factor is the global strength of the US Dollar. As the US Federal Reserve maintains a cautious stance on its own interest rates, the dollar remains the "safe-haven" currency of choice, drawing capital away from emerging markets like Nigeria. This global trend, combined with Nigeria's internal fiscal challenges, has created a "perfect storm" for the local currency.

The Impact on the Real Sector

The persistent fall of the Naira has immediate and painful consequences for the Nigerian "real sector"—the manufacturers and producers who drive the economy.

Increased Cost of Production: Most Nigerian industries rely heavily on imported raw materials. As the Dollar becomes more expensive, the landing cost of these materials skyrockets.
Inflationary Pressure: Because Nigeria is an import-dependent economy, any depreciation in the Naira translates directly to higher prices on store shelves for everything from electronics to basic food items like bread and milk.
Uncertainty in Planning: For businesses trying to set budgets for the fiscal year 2026, the inability to predict the exchange rate makes long-term planning nearly impossible, leading to a "wait-and-see" approach that slows down overall economic growth.

CBN Interventions and Market Reforms

In response to the three-day slide, the Central Bank of Nigeria has reiterated its commitment to market transparency. The CBN’s current strategy focuses on a "willing buyer, willing seller" model, allowing the market to determine the fair value of the Naira. While this transparency is praised by international financial bodies like the IMF, it also means that the currency is more susceptible to short-term shocks and speculative attacks.

To mitigate the current slide, there are rumors that the apex bank may deploy more aggressive liquidity tools in the coming days. This could include higher-frequency dollar auctions or tighter controls on speculative trading by Bureau De Change (BDC) operators who are often accused of fueling the "black market" disparity.

The Parallel Market Paradox

While the official NAFEM rate is the benchmark for government and large corporate transactions, the "Parallel Market" (Black Market) continues to exert a psychological influence on the economy. Often, when the Naira depreciates for three consecutive days in the official window, the parallel market reacts even more sharply, widening the "spread" between the two rates. This gap often encourages "arbitrage," where individuals attempt to buy cheap at the official rate and sell high on the street, further destabilizing the system.

Conclusion: Can the Naira Bounce Back?

The question on every Nigerian’s mind is whether this three-day depreciation is a temporary blip or the start of a long-term decline. While the current numbers look bleak, economic history shows that the Naira often goes through cycles of volatility before stabilizing. The key to a recovery lies in increased domestic production and foreign direct investment (FDI). Until Nigeria can earn more foreign exchange through exports other than crude oil, the Naira will remain vulnerable to the ebb and flow of global market sentiments.

For now, investors and citizens alike are keeping a close watch on the NAFEM dashboards, hoping that the fourth day of trading will bring the elusive "green candle" of recovery.

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