Market News

BY  Hope Moses-Ashike 

The naira on Monday surged to a four-month high of N1,518.88 per dollar at the official foreign exchange (FX) market, driven by improved liquidity and a moderation in demand for the greenback across FX windows.

The last time the naira traded at a stronger level was on March 14, 2025, when it closed at N1,517.93 per dollar.

By the close of trading on Monday, the local currency had appreciated by 0.74 percent, gaining N11.38 from Friday’s rate of N1,530.26 per dollar at the Nigerian Foreign Exchange Market (NFEM), according to data published by the Central Bank of Nigeria (CBN).

In the parallel market, also known as the black market, the naira held steady at N1,545 per dollar, the same level it closed the previous week, reflecting relative calm despite fluctuating market dynamics.

The naira’s recovery came in spite of a decline in FX inflows last week. According to a report by Coronation Merchant Bank, total FX inflows fell to $749.8 million from $1.76 billion the previous week. Nevertheless, Foreign Portfolio Investors (FPIs) remained dominant, contributing 46.13 percent of total inflows for the eighth consecutive week, a trend seen as a reflection of sustained interest in Nigerian fixed-income assets.

Non-bank corporates followed with a 33.68 percent share of inflows, while exporters contributed 18.45 percent. Inflows from local individuals and international corporates were minimal, accounting for just 0.93 percent and 0.66 percent, respectively.

Despite the strong performance on Monday, the naira had depreciated by N1.70 or 0.11 percent week-on-week at the Nigerian Autonomous Foreign Exchange Market window last week, closing at N1,530.26 per dollar. The decline was largely due to a moderation in inflows, compounded by higher outflows from local sources including importers and non-bank corporates. In contrast, the parallel market appreciated by 0.97 percent over the week, closing at N1,545 per dollar.

In a further sign of stability, the CBN reported an increase in gross external reserves, which rose by $173.88 million or 0.47 percent to $37.36 billion as of July 10, 2025. This reversed the $138.30 million decline recorded in the prior week.

“We expect exchange rate pressures to remain contained over the long term, supported by sustained dollar liquidity from CBN interventions and strong foreign portfolio inflows. Additionally, the gradual resumption of international transactions on Naira debit cards as announced by some banks is unlikely to significantly disrupt market stability, given the sustained depth and participation in the official FX window,” analysts at Coronation Merchant Bank said.

In line with the improving FX landscape, more Deposit Money Banks (DMBs) have resumed international usage of naira-denominated cards, introducing varied daily and monthly spending limits. These banks include Providus Bank, First Bank of Nigeria, Guaranty Trust Bank (GTBank), United Bank for Africa (UBA), and Wema Bank.

While some analysts believe that the reactivation of international Naira card services could add mild short-term pressure on the currency, others argue that any such impact will likely be offset by the ongoing FX reforms, enhanced liquidity, and a more transparent, market-reflective exchange rate system.