Naira cools as Dangote's dollar-based fuel sales lift FX demand

The naira weakened slightly in the official foreign exchange (FX) market on Tuesday after Dangote Petroleum Refinery began selling petroleum products in U.S. dollars, a move that has heightened demand for foreign currency and raised concerns about renewed pressure on the exchange rate.

BusinessDay earlier reported that Dangote Petroleum Refinery had stopped selling petrol, diesel and aviation fuel in naira, switching all product sales to dollar pricing. The decision is expected to increase demand for dollars among fuel marketers and could push pump prices higher in Africa’s largest oil-producing economy.

Data published by the Central Bank of Nigeria (CBN) showed that the naira depreciated by N3.43 at the Nigerian Foreign Exchange Market (NFEM), closing at N1,383.08 per dollar on Tuesday, compared with N1,379.65 on Monday, representing a 0.25 percent decline.

The local currency, however, strengthened in the parallel market, where it appreciated by N5 to N1,420 per dollar from N1,425 on Monday. As a result, the gap between the official and parallel market rates narrowed to N37 per dollar from N46 recorded a day earlier.

Activity in the interbank FX market strengthened significantly. The number of deals rose sharply to 140 on Tuesday from 85 on Monday, while total turnover surged by 182.20 percent to $243.09 million from $86.14 million.

Although the CBN had yet to publish Tuesday’s NFEM trading figures as of the time of reporting, the latest available data showed trading activity eased slightly, with the number of deals falling by 1.47 percent to 269 on July 13 from 273 recorded on July 10. However, total turnover increased by 27.51 percent to $548.94 million from $430.52 million over the same period.

Nigeria’s external reserves, which provide the CBN with the capacity to support the naira and meet external obligations, continued their upward trend, rising to $51.85 billion as of July 13, 2026. This represents a 37.75 percent increase from $37.64 billion recorded in the corresponding period of 2025, according to CBN data.

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Industry participants said depot owners and fuel marketers across major supply hubs are expected to begin adjusting ex-depot and retail fuel prices upward in response to the refinery’s new dollar-based pricing regime.

The shift means marketers, who traditionally fund product purchases in naira, will now have to source dollars through the official or parallel FX markets to lift products from Dangote’s facilities, increasing operating costs that are likely to be passed on to consumers.

Analysts expect the impact to begin reflecting at filling stations within days, potentially reversing some of the price relief recorded after the introduction of the naira-for-crude arrangement last year.

In its latest market report, Coronation Merchant Bank noted that the naira weakened by 0.68 percent week-on-week at the NFEM last week, closing at N1,379.62 per dollar from N1,370.19 previously. Although the currency opened the week stronger at N1,368.27 per dollar, it lost those gains as demand for foreign exchange intensified.

The bank also noted that the parallel market rate weakened to N1,420 per dollar from N1,400, widening the parallel market premium to N40.38 from N29.81 recorded a week earlier.

On the external front, Coronation said Nigeria’s gross foreign exchange reserves increased by 0.42 percent week-on-week to $51.74 billion as of July 9, while total FX inflows stood at $0.97 billion. Fixed-income foreign portfolio investors accounted for the largest share of inflows at 30.29 percent, closely followed by exporters and importers at 30.14 percent. Non-bank corporates contributed 26.49 percent, the CBN accounted for 6.93 percent, while other sources made up the remaining 5.40 percent.

“Looking ahead, we expect the naira to trade within a relatively stable range, supported by sustained foreign exchange inflows and the CBN’s continued market interventions, although persistent underlying FX demand is likely to keep depreciation pressures elevated,” analysts at Coronation Merchant Bank said.

Hope Moses-Ashike

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.