The naira performance across foreign exchange markets remained mixed over the past week, as the local currency gained strength in the official market but lost slight value in the parallel segment.
At the Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira appreciated by 1.12 per cent, closing at ₦1,457.95 per dollar, compared to ₦1,475.35/$ recorded in the previous week.
Analysts attributed this improvement to intermittent interventions by the Central Bank of Nigeria (CBN) and increased Foreign Portfolio Investment (FPI) inflows.
Conversely, at the parallel market, the naira performance weakened by 0.49 per cent, settling at ₦1,491.25 per dollar.
Market observers noted that the pressure was driven by sustained foreign exchange demand from importers and cautious sentiment among retail traders.
Naira Performance Bolstered by Rising Reserves
Nigeria’s external reserves witnessed a moderate increase during the week, climbing by over $170 million to $42.87 billion as of Wednesday.
The steady build-up was supported by firm oil receipts, improved non-oil exports, and a continued trade surplus, all of which have strengthened confidence in the CBN’s FX management strategy.
Analysts say this uptick in reserves is critical to maintaining exchange rate stability and sustaining investor confidence.
A report by Cowry Asset Management Limited noted that the trend demonstrates the positive impact of recent policy interventions on overall naira performance.
“In the coming week, we expect the naira to experience mild pressure in the near term as FX demand persists amid limited market liquidity.
However, steady oil inflows and a gradual build-up in reserves could offer some support to the local currency,” the analysts stated.
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Analysts Eye FX Reforms as CBN Strengthens Confidence
Experts at Afrinvest Research shared similar sentiments, predicting that the naira performance will likely remain within a narrow trading band barring any external shocks or liquidity disruptions.
“In the week ahead, we expect the naira to trade within similar levels across the various FX segments, unless short-term market disruptions occur,” the firm noted in its outlook.
The CBN has intensified efforts to restore investor confidence and ensure long-term currency stability. During the recent IMF/World Bank Annual Meetings in Washington D.C., CBN Governor Olayemi Cardoso confirmed that Nigeria was revisiting the idea of bilateral currency swap arrangements to reduce dependence on the U.S. dollar.
He explained that while previous local currency trade initiatives had limited success, the CBN was designing a new framework aligned with ongoing FX reforms to enhance competitiveness and balance trade flows.
“We have had an experiment with switching to national currencies in bilateral trade, and to be frank, it did not work out very well.
That is not to say we are not interested in doing this again. Now that our currency is more competitive, we want to ensure it becomes a win-win for all partners,” Cardoso stated.
Naira Performance Could Strengthen with Policy Consistency
Financial experts believe that sustained policy consistency, improved supply-side interventions, and robust monitoring of FX inflows could further stabilize naira performance in the medium term.
According to a recent investment brief by Comercio Partners, titled “The Sequel Nobody Asked For,” the apex bank’s decision to reintroduce a naira–yuan swap deal worth ₦3.28 trillion could improve trade settlements and reduce reliance on the dollar.
The firm acknowledged that earlier attempts faced setbacks due to logistics challenges and weak awareness, but noted that the ongoing FX reforms had made the naira more attractive for trade settlements.
“If this one sticks, it could strengthen trade ties and stabilize reserves. Third time’s the charm, hopefully,” Comercio Partners stated.
Investors Maintain Cautious Optimism
Despite the encouraging trends, market participants remain cautious. Persistent demand for FX by importers and travellers continues to exert mild pressure on liquidity.
Nonetheless, the consistent rise in reserves and the CBN’s transparent FX auction policies are seen as strong foundations for improved naira performance in the coming months.
Financial analysts also emphasized that maintaining fiscal discipline and strengthening non-oil exports remain essential to achieving sustainable currency stability.
“The momentum can only be maintained if the government aligns its fiscal strategies with CBN’s monetary reforms, while addressing structural bottlenecks affecting export diversification,” said a Lagos-based economist, who noted that the resilience of the naira would depend on the country’s ability to sustain inflows and curb speculative trading.
Outlook: Sustained Stability in Focus
As Nigeria continues to navigate global economic headwinds, stakeholders expect naira performance to remain relatively stable in the short term, supported by rising reserves, cautious CBN interventions, and growing investor participation.
With oil prices remaining above $80 per barrel and steady inflows from remittances, analysts forecast that the naira could consolidate its recent gains, provided there are no major policy reversals or global shocks.
In the long run, effective coordination between monetary and fiscal authorities will remain the linchpin for maintaining a competitive exchange rate and fostering macroeconomic stability.
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