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Naira ends week steady at N1,535 amid rising FX reserves - BUSINESSDAY
The naira closed the week flat at N1,535 against the US dollar in the official foreign exchange (FX) market, supported by improved liquidity and a notable rise in external reserves, which have now surpassed the $41 billion mark.
By the end of five trading days on Friday, the naira depreciated marginally by N1.36 to N1,535.03 per dollar, representing a 0.08% change from N1,533.67 recorded on Monday. On a daily basis, the local currency showed slight appreciation, gaining N0.75 as the dollar was quoted at N1,535.03 on Friday, compared to N1,535.78 on Thursday, according to data from the Central Bank of Nigeria (CBN).
Week-on-week, however, the naira weakened slightly by 0.16%, losing N2.52 from the N1,532.51 per dollar level it closed at the previous Friday, based on official data.
In the parallel market, the naira remained stable at N1,545 per dollar throughout the week. Meanwhile, GTBank’s FX rate for international transactions fell slightly to N1,542 on Friday, down from N1,543 on Thursday and N1,545 earlier in the week.
Providing support to the exchange rate, Nigeria’s external reserves climbed past the $41 billion mark, closing at $41.07 billion as of August 21, 2025, according to the CBN.
As of August 19, 2025, Nigeria’s foreign currency reserves grew to $41.00 billion. This represents a year-on-year increase of $4.53 billion, or 12.42%, compared to $36.47 billion on the same date in 2024. The last time reserves reached this level was March 12, 2021, when they stood at $41.08 billion.
Read also: Naira gains as external reserves hit four-year high of $41.00bn
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The CBN’s authority to manage external reserves stems from Section 2 of the CBN Act 2007, which mandates the Bank to “maintain external reserves to safeguard the international value of the legal tender currency.” Nigeria’s reserves are primarily held in US dollars.
A recent report by United Capital highlighted that the naira appreciated by 1.4% in July, improving from N1,552/$1 in June to N1,530/$1. The gap between the official and parallel market rates remained narrow. External reserves also rose steadily throughout July, closing at $39.4 billion on a 30-day moving average. “The actual reserve level is now above $40 billion, covering over 9.5 months of import needs,” analysts at United Capital stated.
This growth in reserves has been attributed to a combination of FX market reforms by the CBN, stronger diaspora remittances, increased foreign portfolio inflows, improved crude oil output, and reduced oil losses. These factors have collectively supported exchange rate stability and gradual naira appreciation.
Analysts at FBNQuest noted that the recent boost in reserves provides the CBN with greater flexibility to continue its intervention strategy in the FX market, aiding liquidity and helping to maintain stability in the exchange rate.
As of July 2025, Nigeria’s gross reserves were sufficient to cover 11.9 months of merchandise imports and 8.2 months when services were included, based on the balance of payments data for the 12 months ending December 2024. This robust external buffer is viewed as critical for maintaining investor confidence, especially amid ongoing global economic uncertainties.
The month-on-month increase in reserves has largely been driven by consistent foreign investor inflows, signaling renewed optimism in Nigeria’s economic outlook. This resurgence is underpinned by attractive carry-trade yields, improving macroeconomic fundamentals, and a more stable FX environment.
