The naira strengthened this week in the official foreign exchange market, bouncing back from declines recorded in the previous seven days as Nigeria's external reserves grew further. The recovery bolstered investor sentiment and eased liquidity pressures across the market.
Central Bank of Nigeria data showed the naira gained N10.74 against the dollar week-on-week. The currency closed at N1,370.19 per dollar on Friday at the Nigerian Foreign Exchange Market, down from N1,380.93 the week before, marking a 0.78 percent improvement.
On the parallel market, the naira ended Friday at N1,400 per dollar, slipping N3 from the opening rate of N1,397.
External reserves, which give the CBN ammunition to support the naira and pay foreign obligations, climbed to $51.45 billion as of June 30, 2026. The reserves jumped $14.24 billion, or 38.27 percent, compared with $37.21 billion in the same period last year.
Trading activity on the NFEM remained robust during the first four days of the week, even though Friday's figures weren't yet available. Transaction numbers jumped to 1,377 deals, up 10.96 percent from 1,241 the previous week.
Average turnover at the NFEM window hit $543.32 million during the week, climbing 24.30 percent from $437.09 million a week earlier. The surge reflected heightened activity in the foreign exchange space.
Interbank dealings also picked up, with transaction numbers rising 16.29 percent week-on-week to 714 from 614. But interbank turnover fell 43.30 percent to $70.43 million on Friday, dropping from $124.22 million recorded the previous week.
Muhammad Sani Abdullahi, a member of the Monetary Policy Committee, said exchange rate pressures had stayed in check. He attributed this to stronger market liquidity, less speculative trading and solid external buffers.
"Exchange rate pressures have remained contained, with relative stability in the foreign exchange market indicative of improved market liquidity, reduced speculative positioning and the presence of adequate external buffers," he said at the MPC meeting.
Abdullahi added that keeping sufficient depth and liquidity in the foreign exchange market would be vital to building the market's ability to withstand potential shocks.
Murtala Sabo Sagagi, also on the MPC, said Nigeria's external sector had stayed strong, boosted by faster reserve growth. According to him, gross external reserves reached $49.49 billion as of May 15, 2026, up from $48.35 billion at the end of March 2026.
That reserve level covered about 9.04 months of imports for goods and services, Sagagi noted. "This strong reserve buffer continues to reinforce investor confidence and support exchange rate stability," he said.
Mustapha Akinkunmi, another MPC member, traced the improved steadiness in the foreign exchange market to Nigeria's transparent and market-led exchange rate policy. He noted the naira traded at N1,371.04 per dollar in the official market as of May 15, 2026.
