The naira depreciated across foreign exchange (FX) market segments on Wednesday, even as the US dollar weakened following Democrats’ sweeping victory in the US midterm elections, highlighting persistent pressures in Nigeria’s domestic currency market despite improving external conditions.
In the parallel market, also known as the black market, the local currency depreciated by N23 or 1.63 percent in a single trading day, as the dollar exchanged at N1,408 on Wednesday, compared with N1,385 on Tuesday.
The depreciation widened the gap between the official and parallel market rates to N61 or 4.53 percent on Wednesday, from N38 or 2.82 percent on Tuesday, signalling renewed pressure in the unofficial market despite the weakness of the dollar internationally.
At the official Nigerian Foreign Exchange Market (NFEM), however, the naira depreciated marginally by 86 kobo, with the dollar quoted at N1,347.79 on Wednesday, compared with N1,346.93 recorded on Tuesday, according to data published by the Central Bank of Nigeria (CBN).
The local currency’s weakness came as the dollar fell on Wednesday and headed for its biggest daily percentage decline in three weeks following the Democrats’ sweeping victory in the US midterm elections, which gave the party control of both chambers of Congress.
The election outcome removed some uncertainty for investors, as market participants assessed the potential implications of the political shift for regulatory policies and the broader US economy.
Meanwhile, activity moderated in the interbank FX market, with total turnover declining by 15.16 percent to $100.93 million on Wednesday from $118.96 million recorded on Tuesday. The number of deals also fell by 17.09 percent to 97 from 117 in the preceding trading session.
Although NFEM figures for turnover and deals were unavailable as of the time of reporting, activity at the official window had strengthened significantly on Tuesday. Total turnover surged by 77.88 percent to $404.11 million from $227.18 million recorded on Monday, while the number of deals increased by 68.36 percent to 298 from 177.
Nigeria’s external reserves, which provide the CBN with the capacity to defend the naira and meet the country’s external obligations, have also maintained an upward trajectory, rising to $55.15 billion as of November 3, 2026.
This represents a 27.48 percent increase from the $43.26 billion recorded in the corresponding period of 2025, according to data published on the CBN website.
Read also: Regulating Nigeria’s digital asset market: Key issues in the SEC’s proposed new rules
Adebowale Funmi, head of research at Parthian Securities, said the weakening dollar presents a favourable external tailwind for the naira, with the potential to improve investor appetite for Nigerian assets, attract foreign capital and ease pressure on the domestic FX market.
However, she noted that sustaining the benefits would depend on Nigeria’s ability to strengthen domestic foreign exchange supply through improved crude oil production and exports, diversification of non-oil export earnings and sustained capital inflows.
“While favourable global dollar dynamics could provide near-term support for the naira, sustained exchange rate stability will require stronger domestic fundamentals and a more resilient foreign exchange earnings base,” she said.
Similarly, Ayodele Akinwunmi, chief economist at United Capital Plc, said an improvement in Nigeria’s trade surplus, increased capital inflows and a moderation in inflation would be critical to strengthening the naira and supporting its appreciation against the US dollar.
Related News
Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks.
She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings.
Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.
Source: