KEY POINTS
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The naira appreciated to N1,391/$ in the official FX market, reversing losses from prior trading sessions and reflecting improved liquidity.
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The parallel market also saw gains, with the naira closing at N1,453/$, narrowing the gap with official rates and indicating reduced market volatility.
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Nigeria’s external reserves rose to $46.18 billion, supporting currency stability and providing the Central Bank with more capacity to manage foreign exchange volatility.
The Nigerian naira closed at N1,391 to the dollar in the official foreign exchange market, marking a notable week-on-week gain. This performance reflects improved liquidity conditions in the foreign exchange market and a steady rise in the country’s external reserves, providing a boost to confidence in the local currency.
Data from the Central Bank of Nigeria (CBN) show that the naira reversed losses seen in the previous trading period, demonstrating a sustained recovery trajectory. Over the week, the currency traded between N1,381/$ and N1,392/$, with an average rate of N1,387.12/$. On Monday, it opened the week at N1,416.5/$, before gradually appreciating to N1,391/$ by Friday, representing an improvement from the prior week’s closing rate of N1,421.9/$.
The naira’s appreciation was observed not only in the official market but also in the parallel (black) market, where the currency strengthened to N1,453/$ on Friday from N1,490/$ on Thursday.
According to Nairametrics Research, the spread between official and parallel market rates, which had widened to N105, narrowed significantly to N62 by the end of the week. Analysts note that the reduced gap suggests growing market confidence, lower speculative pressure, and improved alignment across the multiple foreign exchange segments in Nigeria.
Rising External Reserves Provide Key Support
Economists attribute the recent gains in the naira to a combination of stronger external reserves and reforms in Nigeria’s foreign exchange market. The country’s external reserves climbed to $46.18 billion during the week, surpassing $46 billion for the first time in nearly eight years.
The Central Bank of Nigeria has projected continued growth in reserves, estimating they will reach $51.04 billion in 2026, up from $45.01 billion in 2025. This growth is expected to provide the apex bank with greater capacity to manage currency volatility and strengthen foreign exchange buffers.
CBN officials have also emphasized that ongoing reforms aimed at improving market efficiency and transparency will help narrow the premium between the official exchange rate and Bureau De Change rates, supporting long-term stability for the naira.
The week-on-week strengthening of the naira demonstrates a positive trajectory for Nigeria’s currency, signaling increased stability in the foreign exchange market. Market watchers note that a combination of higher external inflows, rising reserves, and reforms in FX operations will likely sustain medium-term support for the naira while reducing volatility across both official and parallel markets.
