Nigeria’s naira displayed a blend of resilience and vulnerability last week, navigating a complex foreign exchange (FX) environment marked by fluctuating sentiment across both official and parallel markets.
Official Market: Slight Appreciation Amid Rising Demand
In the official Nigerian Foreign Exchange Market (NFEM), the naira appreciated marginally, closing at ₦1,531.95 per dollar a modest gain of roughly 0.1% from ₦1,533.74 at the start of the week.
Parallel/Black Market: Steady Yet Pressured
Meanwhile, activity in the parallel market remained relatively stable, with the naira trading flat at ₦1,560 per dollar, even as underlying demand pressure persisted.
Supply Crunch vs. Policy Backing
Total FX inflows fell sharply to $791.1 million from $979.1 million in the preceding week, signaling reduced dollar availability in the market.
Despite this decline, the rise in Nigeria’s foreign reserves — adding $726.8 million and reaching $39.36 billion hinted at improving external financial conditions and bolstered market confidence.
Behind the Dynamics
Experts attribute the naira’s relative stability to a combination of factors:
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Central Bank intervention — though limited in recent weeks, continued support has softened depreciation pressures.
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Solid domestic uptake — local corporates and exporters stepped in to fill the FX void, reducing reliance on external sources.
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Macro outlook improvements — recent upward revisions in growth forecasts by the IMF helped lift investor sentiment.
Outlook
The naira currently reflects a precarious balance: while showing resilience under pressure, several threats remain:
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Persistent FX demand amid limited supply.
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A sustained reliance on reserves without fundamentally resolved structural pressures.
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Potential renewed depreciation if policy support weakens.
Moving forward, continued diversification of FX inflows and strategic Central Bank support will be essential to maintain stability.
