Naira Appreciates to N1,497/$ as FX Inflows and Reserves Boost Market Confidence

Lagos, Nigeria — The Nigerian naira appreciated against the US dollar on Monday, trading below the N1,500/$ threshold for the first time in over six months. According to the Central Bank of Nigeria (CBN), the domestic currency closed at N1,497.46/$, compared to its previous close of N1,501.49/$, marking a 0.27% gain.

The last time the naira traded below N1,500/$ in the official market was between February 24 and March 4, 2025. This recovery follows a week where the naira repeatedly tested the N1,500/$ mark, posting its lowest intra-day rates just above that threshold.

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The positive momentum extended to the parallel market, where the naira strengthened by 0.33% to settle at N1,535/$, according to CardinalStone Research data.

Reports indicated that the naira gained 0.98% week-on-week to close at N1,501.50/$ in the official window, while the parallel market also firmed to N1,535/$.

The Coronation Weekly Update revealed that the official exchange rate ended the week at a ₦35.50 or 2.23% premium to the parallel market rate, indicating a narrowing gap between both markets.

Total foreign exchange inflows into Nigeria rose to $550.90 million last week, slightly lower than $567.20 million recorded in the previous week. Foreign Portfolio Investments (FPIs) dominated, accounting for 55.15% or $303.8 million. Exporters contributed 17.61%, non-bank corporates 17.57%, other corporates 4.32%, Foreign Direct Investments 3.39%, the CBN 2.36%, and individuals 0.60%.

According to analysts, the currency’s appreciation is largely driven by strong foreign portfolio inflows, healthy external reserves, and continued CBN policy interventions.

AIICO Capital noted that ample dollar liquidity from FPIs, oil exporters, and offshore flows underpinned an offered market tone throughout last week.

“The FX market is expected to maintain its current stability, supported by the CBN’s continued policy adjustments and fiscal efforts to ensure adequate liquidity,” AIICO analysts said.

Cowry Asset Management Limited added that the naira’s recovery is driven by steady dollar inflows, CBN interventions, and stronger reserves, but warned that renewed speculative activity could still trigger volatility.

Experts project that the naira will likely trade within a narrow band in the short term. Coronation analysts said that stability could be sustained by steady inflows and healthy reserves but cautioned that pressures may re-emerge if portfolio flows moderate or foreign exchange demand surges ahead of the year-end festive season.

As of Friday, Nigeria’s gross external reserves rose to $41.69 billion, reflecting consistent daily accretions. This upward trend is expected to boost market confidence and support the CBN’s efforts to stabilize the naira.

Despite these gains, analysts warn that sustaining the recovery depends on structural reforms, diversifying FX sources, and policies that attract more long-term foreign direct investments rather than short-term portfolio flows.

The naira’s return below ₦1,500/$ signals improved market confidence. However, the weeks ahead will determine whether the domestic currency can maintain its resilience against external pressures.