Market News

…Hits five-month high of N1,497.46

The naira’s stability is expected to persist over the medium term as speculative activities continue to decline, according to members of the Monetary Policy Committee (MPC) in their last meeting held in July 2025.

The naira on Monday climbed to a five-month high of N1,497.46 at the official market, buoyed by easing demand pressure and improved foreign exchange (FX) liquidity.

The last time the currency was stronger than this level was on March 4, 2025, when it traded at N1,491.67 per dollar in the Nigerian Foreign Exchange Market (NFEM).

Year-to-date, the naira has appreciated by N43.9 or 2.9 percent, after strengthening to N1,497.46 on September 15, 2025, from N1,541.36 at the beginning of the year. On a daily basis, it gained 0.3 percent or N4.03 on Monday, rising from N1,501.49 recorded on Friday, according to data from the Central Bank of Nigeria (CBN).

At the parallel market, also known as the black market, the naira appreciated to N1,525 compared with N1,530 last week.

Bala Moh’d Bello, one of the members of the MPC, said in his personal statement that the naira exchange rate remained relatively stable, reflecting the benefits of tighter liquidity conditions, increased investor confidence, and the effective implementation of recent adjustments to the FX management framework.

He noted that speculative activities in the FX market have declined significantly, fostering greater transparency and promoting market-based price discovery. This stability, according to him, is expected to persist over the medium term, supported by rising external reserves which stood at $40.11 billion as of July 18, 2025, equivalent to approximately 9.5 months of import cover.

Aloysius Uche Ordu, another MPC member, said the naira’s appreciation and the narrowing of the gap between the official and Bureau de Change (BDC) rates reflected improved foreign exchange liquidity. He explained that remittances and foreign portfolio investments remained strong, contributing significantly to the boost in external reserves which stood at $40.11 billion as of July 18, 2025, providing over nine months of import cover.

Bandele A. G. Amoo, also an MPC member, said in his personal statement that improved sector performance in the Nigerian economy engendered positive investor sentiments. He observed that the naira continued to strengthen at the official window, while holiday dollar demand weighed on the sentiment of the parallel market. He explained that Nigeria’s balance of payments position remained stable and supportive of external sector stability, with portfolio inflows remaining high and recording positive net inflows at the end of June 2025.

Emem Usoro, deputy governor of the CBN, said exchange rate movements had been notably encouraging, underpinned by higher FX turnover in the market, reforms aimed at enhancing price discovery and transparency, and growing investor confidence anchored by rising external reserves. She explained that the interplay between exchange rate stability, broad money growth, and disinflation had been particularly important in reducing pass-through effects, which in turn has reinforced inflation expectations among households and firms.

Lamido Abubakar Yuguda, yet another member of the MPC, said efforts to attract more diaspora FX flows had been quite successful and should be strengthened further. He highlighted that the progressive growth of both gross and net foreign exchange reserves is providing the much-needed external buffer to anchor exchange rate stability.

Mustapha Akinkunmi, also an MPC member, said that despite global uncertainties such as trade tensions and geopolitical risks, the Nigerian naira demonstrated notable resilience. He observed that exchange rate volatility, as measured by standard deviation, dropped significantly from N203 per dollar in 2024 to just N5.34 per dollar in the first half of 2025. At the same time, Nigeria’s gross external reserves grew by 9 percent year-on-year, reaching $37.81 billion in June 2025 compared to $34.76 billion in June 2024, and further increased to $40.11 billion by July 18, 2025. He stressed that this provides a sufficient buffer to cover approximately 9.5 months of goods imports, thereby enhancing external sector stability.

Inflows

Meanwhile, total FX inflows fell to $550.90 million last week, slightly below the $567.20 million recorded the previous week, according to Coronation Merchant Bank Research.

Foreign Portfolio Investment (FPI) was the largest contributor, accounting for $303.8 million or 55.15 percent. Exporters provided 17.61 percent, while non-bank corporates contributed $91.3 million or 17.57 percent. Other corporates accounted for $23.8 million (4.32 percent), Foreign Direct Investment (FDI) stood at $18.7 million (3.39 percent), the CBN contributed $13.0 million (2.36 percent), and individuals supplied $3.3 million (0.60 percent). Notably, the CBN did not make direct interventions during the week.

Nigeria’s gross external reserves also rose by $357.84 million or 0.87 percent to $41.66 billion as of Thursday, supported by steady daily accretions.