On Monday, the Nigerian naira gained N5.72 in value across foreign exchange markets.
Data from the Central Bank of Nigeria (CBN) showed the dollar trading at N1,600.43 on the Nigerian Foreign Exchange Market (NFEM), a 0.4 percent increase from Friday’s rate of N1,606.15.
This rise was supported by consistent foreign currency inflows, with non-bank financial institutions and exporters contributing 62.44 percent of the total supply.
A report by the research division of Coronation Merchant Bank indicated that inflows into the NFEM window totaled $619 million, a 7.34 percent decrease from the previous week’s $668 million.
The CBN accounted for 18.00 percent of these inflows, while Foreign Portfolio Investors (FPIs) contributed 16.78 percent. Non-bank corporations were the largest source at 34.27 percent, followed by exporters at 28.17 percent. The remaining 2.78 percent came from other sources.
In the parallel market (black market), the naira’s value remained stable at N1,625 per dollar, according to street traders and online data platforms.
Looking at the previous week, the naira depreciated by 0.25 percent against the dollar in the official spot market, closing at N1,606.15/US$1, marking its third consecutive week of decline despite interventions by the CBN. The 1-month, 3-month, 6-month, and 1-year forward rates closed at N1,641.59/US$1, N1,707.37/US$1, N1,799.21/US$1, and N1,988.66/US$1, respectively. In the parallel market, the naira lost 0.93 percent against the dollar, closing at N1,625.00/US$1 on Friday.
This appreciation occurs as the World Bank reported that Nigeria’s FX market turnover continues to be heavily influenced by CBN interventions and inflows from foreign portfolio investors (FPIs), despite recent efforts to liberalize the market.
According to the Bank’s latest Nigeria Development Update, titled ‘Building Momentum for Inclusive Growth,’ while overall FX turnover has improved following recent policy changes, the market still relies significantly on CBN interventions, often aimed at managing volatility and attracting short-term foreign portfolio investment with high yields and potential revaluation gains.
The report noted the volatile nature of short-term FPI flows and stressed that for the FX market to fully stabilize, traditional sources of foreign currency, such as oil exports and remittances, must consistently and substantially return to the official channels.
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