The naira slipped further against the US dollar on Tuesday, May 5, 2026, as rising demand for foreign payments and slower interventions by the Central Bank of Nigeria (CBN) increased pressure on the local currency. Commercial banks, including Access Bank, United Bank for Africa, and Zenith Bank, quoted higher foreign exchange rates for customers amid volatility in the Nigerian Foreign Exchange Market (NFEM).
High Foreign Exchange Demand Pushes Naira Into Further Depreciation
At the official market, the naira closed at N1,366.56 per dollar, slightly weaker than the N1,365.25/$ recorded the previous trading day, according to the CBN's daily foreign exchange report. CBN data shows that the latest decline reflects sustained pressure from importers and businesses seeking dollars for foreign obligations. At the same time, reduced intervention from the apex bank has left the market more exposed to demand-driven fluctuations.
CBN Slows Dollar Support to Protect External Reserves
The CBN injected $150 million into the FX market in April, representing a sharp 83% drop compared to the amount supplied in March, according to a report by Punch. Analysts say the reduced intervention signals a deliberate move by the apex bank to preserve Nigeria's gross external reserves, which have reportedly dropped by nearly $1 billion to $48.34 billion. Despite the lower intervention, activity in the interbank FX market improved significantly, helping to support liquidity in the official window. CBN data revealed that interbank foreign exchange turnover rose sharply to $71.59 million across 99 deals, compared to $59.93 million in the previous trading session. This increase suggests stronger participation among banks and financial institutions, even as the central bank adopts a more cautious stance.
Oil Price Movement Adds to Market Uncertainty
Global crude oil prices also weakened on Tuesday, adding another layer of uncertainty to Nigeria's FX outlook. Brent crude futures dropped by $1.38, or 1.2%, to $113.06 per barrel after a nearly 6% jump on Monday. U.S. West Texas Intermediate crude also declined by $2.21, or 2.1%, to settle at $104.26 per barrel. The drop followed a United States military operation aimed at reopening the Strait of Hormuz to shipping traffic, although tensions between U.S. and Iranian forces slowed the pace of decline. Because Nigeria relies heavily on crude exports for foreign exchange earnings, weaker oil prices could further affect dollar inflows and put added strain on the naira.
Cardoso Defends Market-Driven FX System
CBN Governor Olayemi Cardoso defended the current foreign exchange framework, stressing that the system is now largely market-driven. "The foreign exchange system that used to operate in those days is very different from what it is now," Cardoso said. "Then, you had the CBN, which was primarily the only one determining that market. That is different now. It is market-driven. There is more liquidity in the market. There is confidence. Investors come in and go out as they like." Broadstreet analysts remain optimistic that, despite short-term volatility, exchange rate stability could improve in the second half of the year if inflows strengthen and investor confidence remains steady.
CBN Dismisses Report on Reserves Decline
Legit.ng earlier reported that Nigeria's external reserves remain robust and strong despite global volatility caused by oil price increases. The Central Bank of Nigeria calmed frayed nerves over concerns regarding movements in the country's external reserves, saying that fluctuations are normal and do not constitute any risk to economic stability. The apex bank's boss, Olayemi Cardoso, disclosed this at the conclusion of the IMF/World Bank Spring Meetings in Washington DC.
