Naira Faces Pressure as Fuel Importers Demand Dollars

The naira is facing renewed pressure against the United States dollar as fuel importers increase their demand for foreign exchange to build inventories. The Nigerian currency was quoted at N1,368/$ on the official foreign exchange market on Thursday, down from N1,383/$ a week earlier, while it traded at about N1,420/$ in the parallel market.

A trader indicated that the local currency is likely to experience downside risks due to importers seeking more dollars for fuel purchases. The anticipated depreciation is attributed to fuel importers, who have been granted licenses by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to import refined petroleum products.

Concerns have been raised by downstream operators regarding the impact of continued fuel imports on foreign exchange demand, despite rising domestic refining capacity. The Dangote Petroleum Refinery has accused the NMDPRA of undermining local production by allowing fuel imports when the refinery's output could meet 45% of the country's fuel needs.