Exchange Rate Gap Collapsed as Naira Maintains Downtrend
The exchange rate gap in Nigeria’s foreign exchange market has collapsed sharply as the spot rate has maintained a downward trend for 14 consecutive trading sessions.
The naira weakened across both exchange channels on Monday, declining 0.88% to ₦1,405.62/$ at the official window and 0.87% to ₦1,403/$ in the parallel market, reflecting heightened currency pressures in both the regulated official segment and the informal foreign exchange market.
The gap between the official and parallel market rates collapsed sharply. Last week, the Naira depreciated by 2.14% at the Nigerian Foreign Exchange Market (NFEM) window, closing at N1,393.26/US$1 compared to N1,363.42/US$1 in the previous week.
This followed a relatively stronger midweek performance, where the currency traded to an intraweek high of N1,387.10/US$1 before moderating toward the close of the week.
As of the weekend, total FX inflows settled at US$1.26 billion, according to Coronation Merchant Bank’s research subsidiary.
Foreign portfolio investors (FPIs) accounted for the largest share, contributing US$518.7 million (41.3%) of total inflows. The CBN followed with US$314.2 million (25.0%), while exporters contributed US$159.1 million (12.7%). Non-bank corporates accounted for US$135.5 million (10.7%), individuals contributed US$110.9 million (8.8%), and other sources.
Nigeria’s gross FX reserves increased to US$49.93 billion as inflows from oil increased alongside other resources, especially foreign portfolio investment.
Analysts said this continued improvement aligns with the sharp increase in net FX reserves to US$34.8 billion at end-2025 from US$3.99 billion two years earlier, as announced during the week.
According to the CBN’s Governor, the improvement reflects stronger external fundamentals and ongoing policy reforms aimed at restoring confidence in the FX market.
“We expect the Naira to trade within a relatively stable range in the near term, supported by sustained FPI inflows and improved participation by exporters in the FX market”.
In addition, ongoing geopolitical tensions, which have contributed to firmer oil prices, could support further accretion to external reserves. #CBN Floats N600bn OMO Bills, Allocates N81bn to Investors
