Market News

The naira depreciated against the dollar across the foreign exchange (FX) market segments on Monday as trading activity moderated and the country’s external reserves paused their recent growth.

Data published by the Central Bank of Nigeria (CBN) showed that the naira weakened by N2.55, with the dollar quoted at N1,349.34 on Monday, compared with N1,346.79 on Friday at the Nigerian Foreign Exchange Market (NFEM).

In the parallel market, also known as the black market, the local currency depreciated by N7 to close at N1,415 per dollar on Monday, compared with N1,408 recorded at the end of last week.

Consequently, the gap between the official and parallel market rates widened to N66, representing 4.89 percent, from N61 or 4.53 percent on Friday.

Market activity showed a slowdown, with total FX turnover declining by 9.70 percent to $210.38 million on Monday from $232.98 million recorded on Friday. The number of deals also fell by 21.09 percent to 116 from 147 transactions.

Although NFEM data on turnover and the number of deals for Monday were unavailable as of the time of reporting, market activity had strengthened on Friday, with total turnover rising by 24.84 percent to $475.12 million from $380.57 million recorded on Thursday. The number of deals also increased by 25.2 percent to 313 from 250.

Meanwhile, Nigeria’s external reserves, which provide the CBN with the capacity to intervene in the FX market and meet the country’s external obligations, declined by 0.36 percent to $55.06 billion as of November 6, 2026.

Despite the recent moderation, the reserves remain significantly higher than their level a year ago. On a year-on-year basis, they increased by 27.10 percent from $43.32 billion recorded in the corresponding period of 2025, according to CBN data.

Analysts at the Financial Markets Dealers Association (FMDA), in their latest weekly report, said the naira recorded divergent movements across the two market segments, with the official market strengthening while the parallel market weakened.

According to the analysts, the NFEM rate appreciated by 0.34 percent to N1,347.64 per dollar, while the parallel market rate depreciated by 1.38 percent to N1,410.60 per dollar. This widened the premium between the two markets to N62.96 from approximately N39 the previous week, reversing the narrowing trend recorded in October.

The analysts also noted that external reserves declined marginally by 0.16 percent week-on-week to $55.133 billion last week1, marking a slight pause after rising above the $55 billion threshold to their highest level since December 2008.

The moderation follows a sustained accumulation in Nigeria’s external reserves over the past year, which has significantly strengthened the country’s external position.

According to CBN data, gross external reserves increased by $1.1 billion to $54.9 billion at the end of September 2026, extending the steady growth recorded over the preceding year. The improvement reflected supportive domestic and external factors, including strong foreign portfolio inflows, elevated crude oil prices, resilient remittance inflows and continued access to multilateral and commercial external financing.

At that level, gross reserves provided an estimated 15.7 months of merchandise import cover and 10.7 months of total import cover, including services, based on balance of payments data for the 12 months to March 2026.

However, the import cover was lower when measured against net external reserves. Based on the net reserves figure of $46 billion recently affirmed by Olayemi Cardoso, governor of the CBN the import cover stood at 13.2 months for merchandise imports and 8.9 months for total imports, including services. 

The improvement in external reserves had coincided with relative stability in the foreign exchange market, supporting liquidity conditions and helping to anchor expectations around the naira. However, the latest decline suggests a pause in the accumulation trend, even as the reserves remain substantially above their levels in the corresponding period of last year.