Foreign Investors’ Demand for Naira Boosts Exchange Rate
Foreign Portfolio Investors (FPIs) requiring naira to stake bets in Nigerian markets and the fixed income and equities market helped strengthen the value of the local currency, the naira, with support from Apex Bank’s dollar injection.
Nigerian markets saw a flood of dollars chasing naira assets during the week, helping the naira to maintain positive momentum against the greenback. The Central Bank of Nigeria (CBN) also injected $22 million into forex market to reduce FX demand pressures.
Since its return to managing excess liquidity in the financial system, the CBN has floated open market auctions with foreign portfolio investors and local deposit money banks as eligible participants.
Opening the fourth quarter with fresh supplies, investors party hard at the open market operations and Nigerian Treasury bill auctions. Offshore investors that participated at the CBN OMO auction converted significant amounts of US dollar to naira for their respective bids at the main auctions.
This drove demand for naira, while the Apex Bank injected $22 million to support the supply side. At the beginning of the week, the currency market experienced demand pressures—driven by FPI exits—that led to naira depreciation across key segments.
However, sentiment reversed midweek, supported by strong foreign inflows, particularly from FPIs sourcing naira to meet local fixed-income obligations, AIICO Capital Limited confirmed in a note.
The firm stated that the naira appreciated steadily from mid-week through Friday, as sustained supply met limited resistance from buyers.
On Friday, the naira strengthened to close at ₦1,455.17/$, appreciating 72bps week on week. Foreign reserves also climbed by about $133.81 million to $42.58 billion.
Analysts in the forex market maintained that the naira is likely to remain stable in the near term, supported by improved US dollar supply and external reserves. With an increase in crude oil production, the market anticipates Nigeria’s foreign reserves to inch near $45 billion mark in December.
The projection was anchored on development in the global commodity market, with fluctuations in prices fuelled by supply and demand risks.
In the week, oil prices fell more than $1 per barrel, or over 2%, this week, following a ceasefire agreement in the Middle East and renewed concerns over demand.
The market anticipates a negative demand outlook as U.S. President Donald Trump threatened increased tariffs on China—casting a shadow over an already oversupplied market.
Brent crude declined by $1.80 (−2.79%) to $62.73 per barrel, while U.S. WTI dropped $1.98 (−3.25%) to close at $58.90.
Gold pared some gains after briefly rallying above the $4,000-per-ounce milestone for the second time this week, as Trump’s tariff warning also triggered a flight to safe-haven assets. Spot gold rose 3.38% to $4,018.30 per ounce, while U.S. gold futures gained 2.34% to settle at $4,000.40.
Commodities are expected to trade mixed next week, with gold likely to remain supported by persistent safe-haven demand amid geopolitical tensions and rate cut expectations.
Oil may face downward pressure as rising global supply and fading risk premiums weigh on prices. Lafarge Africa Delivers 80% Return on Investment in 9-Month
