The Nigerian naira has experienced a substantial depreciation against the U.S. dollar, opening the week on a negative trajectory due to a significant drop in foreign exchange (FX) supply. FMDQ data indicated that the naira fell to N1670.65 per dollar on Monday, down from N1600 last Friday—marking a N70.65 decline in value.

The currency also weakened at the parallel market, trading at N1746 per dollar on Monday compared to N1740 at the close of last week.

The steep depreciation comes as FX transaction turnover took a considerable hit, plummeting to $81.17 million on Monday from $284.93 million on Friday. Analysts note that the sharp decline in supply has heightened pressure on the naira, contributing to the broader volatility in Nigeria’s foreign exchange market.

The depreciation trend underscores the country’s ongoing currency challenges, which have been exacerbated by dwindling FX inflows, inflationary pressures, and high demand for foreign currency. Economists warn that if FX supplies remain low, further depreciation of the naira may be likely, potentially impacting import costs and inflation in the near term.