The naira has quietly been making its case for stability, and the latest trading data from the Central Bank of Nigeria gives it some ground to stand on. On Thursday, the local currency appreciated by 0.07% against the US dollar at the Nigerian Foreign Exchange Market, closing at N1,331.61 per dollar compared with N1,332.59 in the previous session. That is a modest move by any measure, but in the context of Nigeria’s notoriously volatile foreign exchange environment, even marginal gains backed by genuine supply improvements deserve attention.
During intraday trading, the exchange rate moved between N1,327 and N1,333.50 per dollar, a relatively contained band that points to orderly conditions at the official window. The steadiness was underpinned by a broader improvement in dollar liquidity, with foreign portfolio investors, non-bank corporates, exporters and importers all contributing to supply. That mix of participants is precisely what a healthy market needs, and the fact that multiple categories of dollar sellers were active on the same day is more encouraging than the headline figure alone suggests.
The gains were not limited to the dollar. The naira also appreciated by 0.07% against the British pound, closing at N1,764.26, and added the same margin against the euro, settling at N1,490.48. Meanwhile, in the parallel market, the dollar slipped 0.29% to N1,370, the pound fell 0.55% to N1,810, and the euro dropped 0.33% to N1,505. Taken together, these movements narrowed the spread between the official and parallel market dollar rates to 2.88%, down from 3.11% in the previous session. That convergence, however slim, matters because a persistently wide gap between the two markets is a reliable signal of underlying dysfunction — and its compression, even temporarily, indicates that the two rates are moving in the same direction.
There is, however, a number that complicates the optimism: interbank foreign exchange turnover collapsed by approximately 59%, falling to $201.56 million from $490.86 million the day before. The number of interbank transactions also dropped, from 179 deals on Wednesday to just 128 on Thursday. A sharp fall in turnover during a session when the naira gains ground is not necessarily alarming — it can simply mean that demand was subdued and supply was adequate to meet it without stress — but it does raise the question of whether the improvement in rates reflects genuine market depth or merely a quiet day. Sustained appreciation requires consistent volume, not just favourable conditions on a slow afternoon.
Analysts at AIICO Capital Limited have pointed to crude oil prices as a critical variable for the naira’s medium-term outlook. Their view is that oil prices above $100 per barrel could sustain the foreign exchange inflows that underpin naira stability, a reasonable position given that petroleum exports remain Nigeria’s dominant source of hard currency. The logic is straightforward enough: higher oil prices boost potential export earnings, which in turn strengthen Nigeria’s foreign exchange position. The complication, as ever, lies in execution — actual gains depend on production levels, the volume of oil sales completed, and crucially, how much of those proceeds are repatriated into the domestic market rather than held offshore or diverted. Nigeria has a long history of oil windfalls failing to translate into domestic currency strength, and that history cannot simply be wished away.
What the data does confirm is that the naira has performed better than many expected over the course of this year. The dollar is down 7.25% against the naira at the NFEM on a year-to-date basis, which represents a meaningful reversal from the severe depreciation that characterised much of 2023 and early 2024. Whether that trend holds will depend on whether dollar inflows remain steady, whether foreign investors maintain their participation, and whether domestic demand for foreign currency — driven by import needs, debt servicing and capital flight — can be kept in check. None of those factors are guaranteed, and the CBN’s ability to manage all of them simultaneously will be the real test of how durable this period of relative calm turns out to be.