Market News

The naira on Wednesday rebounded in the official foreign exchange (FX) market, snapping a week-long streak of losses as liquidity conditions improved.

Data from the Central Bank of Nigeria (CBN) showed the currency appreciated by N1.65, with the dollar quoted at N1,379.46, a marginal gain of 0.09 percent compared to N1,380.71 recorded on Tuesday at the Nigerian Foreign Exchange Market (NFEM).

Intraday trading reflected improved market activity, with dealers quoting the naira as strong as N1,365 per dollar and as weak as N1,386 within the NFEM window.

At the parallel market, also known as the black market, the naira held steady at N1,400 per dollar. This left the gap between the official and parallel market rates at N21, slightly wider than N20 recorded the previous day.

Meanwhile, Nigeria’s external reserves, an important buffer that provides the CBN with the capacity to support the naira, continued on a gradual downward trend. Reserves declined by 3.29 percent to $48.37 billion as of April 28, 2026, from a peak of $50.02 billion recorded on March 11, 2026, according to data on the CBN’s website.

Addressing concerns over the decline, Olayemi Cardoso, governor of the Central Bank of Nigeria, said the movement in reserves is both expected and not a cause for concern.

He noted that Nigeria’s reserve position remains well above international benchmarks, covering about 13 months of imports, significantly higher than the minimum levels recommended by the International Monetary Fund.

Cardoso emphasised that fluctuations in reserves are normal in a more liberalised and market-driven FX system, where investor flows in and out of the market play a larger role than direct central bank control.

He added that the current FX framework differs markedly from the past, when the central bank was the dominant force in determining exchange rates. According to him, improved liquidity and growing investor confidence now allow the market to function more independently.

While acknowledging public sensitivity to short-term movements in reserves and exchange rates, Cardoso stressed that such reactions are often exaggerated relative to the scale of changes.

He maintained that, in a market characterised by stronger liquidity, the level of reserves, though still important, has become less central than it was in previous years when liquidity constraints were more binding.

“The market is sufficiently liquid to operate on its own,” he said, adding that modest fluctuations in reserves should be viewed as part of a broader, more stable adjustment process rather than a signal of underlying weakness.