Market News

The naira on Wednesday maintained its upward trend across foreign exchange (FX) market segments, amid improved dollar liquidity, as Nigeria’s external reserves reached an 18-year high of $53.34 billion.

Data published by the CBN showed that the naira appreciated by N3.39, with the dollar quoted at N1,343.59 on Wednesday, compared with N1,346.98 on Monday at the Nigerian Foreign Exchange Market (NFEM).

In the parallel market, also known as the black market, the local currency steadied at N1,405 per dollar on Wednesday. The gap between the official and parallel market rates widened to 4.62 percent from 4.38 percent on Monday.

Read also: Naira maintains stability as FX liquidity cools, reserves hit $52.8bn

Market liquidity improved, with total turnover in the interbank segment of the FX market jumping 54.66 percent to $235.99 million on Wednesday from $152.59 million recorded on Monday. The number of deals also rose 47.92 percent, from 144 on Monday to 213 on Wednesday.

Although Wednesday’s NFEM figures for deals and turnover were not available as of the time of reporting, activity had moderated slightly, with total turnover declining 3.27 percent to $731.18 million on Monday from $755.87 million on Friday. The number of deals at the NFEM, however, surged 196.33 percent from 109 on Friday to 323 on Monday.

Nigeria’s gross external reserves, which give the CBN the firepower to defend the naira and meet external obligations, have maintained a steady growth trajectory, rising to an 18-year high of $53.11 billion as of August 24, 2026.

This represents a 28.85 percent increase from the $41.22 billion recorded in the corresponding period of 2025, according to data published on the CBN website. The last time external reserves reached a similar level was on December 24, 2008, when they stood at $53.34 billion.

According to a report by United Capital Plc, Nigeria’s external reserves performance in the first half of 2026 showed a clear three-phase pattern: early stability, sustained drawdown and late-period recovery. The major drivers include increased crude oil revenue, higher capital importation, an improved net export balance, rising remittances from abroad and growing confidence in the Nigerian economy.

“The current level of the reserves is enough to cover over 10 months of imports. It also provides stability for Naira stability and possibly appreciation. Our revised forecast for year end is $53.25bn. This will be enough to cover over 13 months imports,” analysts at United Capital said.

Nigeria’s gross external reserves increased by $465 million month-on-month to $51.9 billion at the end of July 2026, according to Quest Merchant Bank Limited.

Quest noted that the sustained accumulation reflected a favourable combination of elevated crude oil prices amid Middle East tensions, a gradual recovery in Nigeria’s crude oil output to about 1.7 million barrels per day, robust capital inflows supported by the CBN’s FX market reforms and a tight monetary policy stance.

On a gross basis, the external reserves provide an estimated 14.5 months of merchandise import cover and 10 months of total import cover, including services, based on balance of payments data for the 12 months to December 2025.

According to the CBN, net external reserves increased to $40.0 billion in July 2026 from $34.8 billion at the end of 2025, indicating a further strengthening of the country’s reserve buffers.

This translates to an import cover of about 11.2 months for merchandise imports and 7.7 months for total imports, well above the conventional three-month adequacy benchmark.

Beyond Nigeria, Egypt’s net external reserves posted the most significant month-on-month increase of $1.2 billion to $56.3 billion, driven by robust capital inflows, increased external financing and favourable revaluation gains on gold reserves.

South Africa’s international liquidity position also increased by $424 million month-on-month to $71.8 billion, supported by valuation gains on gold holdings and foreign currency assets, as well as positive mark-to-market adjustments on forward positions.

Looking ahead, “we remain constructive on Nigeria’s external position, with reserve buffers expected to strengthen further on the back of supportive oil market dynamics, resilient capital inflows, and the credibility of the monetary authorities’ policy framework,” analysts at Quest Merchant Bank Limited said.