Currency volatility increases as campaign spending and political activities drive unprecedented demand for foreign exchange in major cities.
Currency volatility increases as campaign spending and political activities drive unprecedented demand for foreign exchange in major cities.
The naira fell to ₦1,742 per dollar on the official NAFEM window on Monday, its lowest point in three months, as analysts link the renewed currency pressure to the early onset of election-cycle spending patterns.
Data from the Central Bank of Nigeria shows a 23% spike in dollar demand from the corporate and bureau de change segments over the past six weeks, a trend economists say mirrors patterns observed in the 12 months preceding the 2019 and 2023 elections.
"Election seasons in Nigeria are effectively fiscal expansionary periods," said Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise. "Political spending injects significant liquidity into the economy, but much of it chases dollars and fuels inflation."
The CBN has so far held its monetary policy rate at 26.75%, maintaining a tight stance adopted in 2024 to combat inflation. However, with election-related spending expected to accelerate, analysts say the central bank faces a difficult balancing act.
The Nigerian Economic Summit Group has called on the federal government to publish a clear framework for managing election-related fiscal pressures, warning that uncoordinated spending could undermine macroeconomic stability gains.