Market News

BY  Chima Nwokoji

•Interbank FX turnover jumps 70 percent to $94.43m

THE naira strengthened against the US dollar, on Friday, after the Central Bank of Nigeria (CBN) sold $151 million to licenced banks, injecting liquidity into the foreign exchange market and easing demand pressure.

This came as Nigeria’s interbank foreign exchange turnover rose 69.82 percent to $94.43 million on Wednesday, from $55.60 million recorded in the previous trading session.

Data from the CBN showed that the naira traded at an official Nigerian Foreign Exchange Market (NFEM) rate of N1,326.5192 per dollar on September 11, 2026, and closed at N1,328.5000. This represented an appreciation of about N1.69 from the previous day’s NFEM rate of N1,328.2154. Transactions during the session ranged between N1,322.7100 and N1,333 per dollar.

The intervention, one of the larger dollar sales this quarter, followed a recent decline in the currency’s value and came amid increased interbank activity. The higher turnover represented an additional $38.82 million in transactions within the interbank segment, according to CBN data.

The number of interbank deals also rose to 86 from 58 on Tuesday, an increase of 28 deals or 48.28 percent. The rise in turnover was therefore accompanied by broader transaction activity rather than being driven solely by a small number of large trades.

On Wednesday, the dollar traded within a range of N1,321.50 and N1,334 in the interbank market. The weighted average exchange rate stood at N1,329.21 per dollar, while the exchange rate closed at about N1,328 per dollar.

The increase in interbank activity also highlights the distinction between transactions recorded specifically in the interbank segment and total turnover reported across the NFEM. On Tuesday, interbank transactions accounted for only a fraction of the $933.78 million total NFEM turnover, while the reported interbank component rose to $94.43 million on Wednesday.

The latest figures underscore the volatility of daily FX market activity, with turnover varying considerably from one trading session to another.

In the parallel market, the naira also recorded modest gains. According to Aboki FX, the buying rate fell by N5 to N1,385 per dollar on Friday, while the selling rate remained at N1,395.

Nigeria’s external reserves stood at $54.341 billion, giving the CBN further room to intervene when necessary.

Analysts said the naira is likely to remain largely range-bound in the near term, with movements determined by the balance between dollar supply and demand, market liquidity and the CBN’s intervention strategy.

While the latest dollar sale helped absorb part of the demand from banks and other authorised participants, market watchers said sustained currency stability would depend more on underlying supply-demand conditions than interventions alone.

A sustained improvement in foreign exchange liquidity could support further stability, while renewed pressure on dollar supply could limit gains and trigger fresh volatility.

Reduction in stop rates as investors focus on longer end of fixed-income market

Investors shifted demand towards longer-dated fixed-income securities at last week’s auction, driving a decline in stop rates across tenors and reflecting growing appetite for longer-term instruments amid expectations of easing yields and improving macroeconomic conditions.

Demand concentrated at the longer end of the Treasury bill curve, while Federal Government of Nigeria (FGN) bond yields fell across short-, medium- and long-term maturities.

At the recent 364-day Nigerian Treasury Bills (NTB) auction, the longer tenor accounted for 96.04 percent of total subscriptions and delivered a 22-basis-point cut in its stop rate to 16.62 percent.

Yield compression in the secondary bond market pointed to improved investor positioning, even as overnight rates remained stable amid tighter money-market liquidity.

For the Federal Government, sustained declines in Treasury bill yields could provide gradual relief from elevated domestic borrowing costs. Nigeria relies heavily on the domestic debt market to finance expenditure, while high interest rates have increased the burden of servicing public debt.

Existing securities will retain their contracted rates, meaning the impact of lower yields will emerge progressively. However, refinancing maturing debt at lower rates would reduce the marginal cost of new borrowing.

Continued strong auction demand could further strengthen the government’s position by allowing it to reject costly bids without jeopardising its funding targets.

Falling yields could also reshape investment flows across Nigeria’s financial markets. Treasury bills, Open Market Operation (OMO) securities and government bonds have traditionally provided institutional investors with relatively low-risk naira-denominated investment opportunities.

As returns moderate, portfolio managers may reassess allocations towards equities, corporate debt and other assets, particularly if inflation continues to ease and expectations of further monetary loosening strengthen.

The Nigerian Exchange could benefit from such a rotation, although lower fixed-income yields alone would not guarantee sustained equity inflows.

Corporate borrowers could also gain if the decline in yields spreads further along the curve. Government securities serve as benchmarks for private-sector debt pricing, meaning lower benchmark yields could eventually ease financing conditions for companies issuing commercial papers and corporate bonds.

Banking system liquidity has also risen sharply, leaving institutions with substantial funds to deploy. The CBN’s latest OMO auction attracted bids well above the amount offered, underscoring investors’ willingness to commit funds to naira-denominated fixed-income assets even as returns decline.

Strong demand gives the CBN greater flexibility to manage rates while absorbing excess liquidity.

Analysts said the direction of yields would depend on liquidity conditions, inflation expectations, monetary policy and the government’s borrowing programme.

Sustained moderation in inflation and comfortable liquidity could support further yield compression, while tighter liquidity or renewed inflationary pressure could slow the decline.

For government and corporate borrowers, a lasting fall in benchmark yields would gradually reduce financing costs and ease the high cost of capital in the Nigerian market.