The Nigerian naira extended its positive momentum on Monday, rebounding to a four-month high against the United States dollar as it closed at N1,518/$ at the official Nigerian Foreign Exchange Market. According to data from the Central Bank of Nigeria (CBN), the naira appreciated by 0.74 per cent, marking its strongest performance since March 14, 2025, when it traded at N1,517.93/$.
This latest appreciation is seen as a significant milestone for the local currency, which had struggled in recent months due to rising dollar demand and constrained foreign exchange (FX) supply. Last week, the naira closed weaker at N1,530.26/$, but analysts had predicted a likely rebound on the back of increased FX liquidity and strategic CBN interventions.
Analysts at Anchoria Limited, in their market projection for the week, forecasted that the naira would trade within a stable range of N1,515–N1,535/$, citing improved dollar supply and sustained CBN measures.
“These actions have helped ease demand pressures and boost market confidence, keeping volatility low,” Anchoria noted, referencing the apex bank’s $50 million sale last week and a successful Open Market Operation (OMO) auction that attracted significant foreign investor participation.
The OMO auction, which offered a total of N600 billion across 272-day and 363-day tenors, recorded total subscriptions of N2.17 trillion. The CBN allotted N1.25 trillion, with the 363-day tenor closing at 21.99 per cent, further signaling investor confidence in Nigeria’s monetary policy direction.
Similarly, Cowry Assets Management Limited, in its weekly FX outlook, expressed optimism about the naira’s stability, attributing it to “sustained CBN intervention, FX reforms gaining traction, and steady oil export revenues.” The firm added that while the demand-supply gap in the FX market remains a major challenge, recent reforms show that Nigeria is on a path toward greater currency stability.
At the parallel market, the naira also appreciated, closing at N1,540/$ compared to the previous week’s average of N1,545/$. Analysts, however, warned that the gap between the official and parallel market rates remains a cause for concern, driven largely by persistent demand for dollars for imports and other business transactions.
Economic experts noted that the naira’s performance in the first half of 2025 was influenced by global risk-off sentiments, particularly due to U.S. trade policies and heightened geopolitical tensions. These external factors triggered FX outflows estimated at $22.83 billion, as investors shifted capital to safer assets like U.S. Treasuries and gold.
To mitigate these pressures, the CBN sold $4.72 billion in the first half of 2025 to defend the naira. According to CardinalStone’s mid-year outlook, titled “Charting the Sustainability Path”, these interventions are not aimed at artificially fixing the exchange rate but at correcting “perceived market distortions.”
CardinalStone further highlighted that the current FX management strategy is more transparent and market-driven compared to previous years. The report noted that the CBN’s average monthly FX intervention of $786.58 million in H1 2025 is significantly lower than the pre-COVID average of $2.30 billion, suggesting a more sustainable approach.
“Both local and international observers now generally agree that the naira is trading close to its fair value,” the report stated, adding that the recent appreciation reflects market confidence in Nigeria’s ongoing FX reforms.
With continued CBN support, steady oil export revenues, and increased investor participation in OMO auctions, experts forecast that the naira will likely maintain its current trajectory in the short term. However, rising FX demand for imports and speculative trading could still exert pressure if not effectively managed.
The latest rebound to N1,518/$ signals renewed market optimism and could further strengthen if the CBN sustains its policy consistency and transparency in the FX market.