Naira Gains as Nigeria’s External Reserves Hit 6-Month High
The naira gained against the US dollar at the Central Bank of Nigeria (CBN) foreign exchange market amidst declining FX inflows. According to data from the CBN, the spot rate rose to N1531.95 per dollar in the absence of fx pressures from N1533.74 at the previous close.
Latest FX update from the monetary authority revealed external reserves climbed to a six-month high following sustained inflows across sources. With sustained inflows, the nation’s gross external reserves balance printed at $39.543 billion as of August 1, according to the CBN.
The surge followed the latest inflows from foreign portfolio investors that participated in the CBN open market operations, supported by elevated yield on OMO bills.
For the local currency, analysts said the outlook remains positive given foreign investors’ strong investment confidence and supportive Central Bank. The naira will maintain its tight exchange rates band across the currency market, MarketForces Africa Research gathered from investment banking firms.
Last week, the Naira was relatively stable at the official window in the absence of significant shock. At the Nigerian Autonomous Foreign Exchange Market (NAFEM), the currency gained 0.06% w/w, closing at N1,533.74/US$1 from N1,534.72/US$1 in the prior week.
The parallel market was unchanged at N1,535/US$1, keeping the street market premium at N2 over the official rate. FX inflows, however, weakened further, slipping to US$791.10 million from US$979.10 million the previous week, according to analysts at Coronation Merchant Bank’s research unit.
FPIs remained the largest international contributors with US$60.90 million, while other international sources accounted for just 0.76%.
On the domestic side, non-bank corporates almost tripled their share to US$483.60 million. Data showed that exporters/importers nearly doubled their contributions to US$168.60 million, while inflows from the CBN and individuals stood at US$68.40 million and US$3.50 million, respectively.
Analysts at Coronation Limited said they expect the FX market to continue to trade within the $1500 – $1600 band, supported by sustained reserve accretion and positive sentiment from recent macroeconomic revisions. However, subdued FX inflows could limit further naira gains, keeping market dynamics sensitive to shifts in investor participation.
Elsewhere, oil prices advanced last week, gaining 2.59% week on week as markets braced for two key developments over the weekend: the upcoming OPEC+ meeting and uncertainty about new sanctions against Russian oil from the US.
The OPEC+ at its August 3, 2025, meeting, which was held virtually, agreed to increase oil production by approximately 547,000 barrels per day starting in September, marking the final phase of reversing the voluntary cuts made since early 2024.
The decision, driven by strong global demand and low inventories, reflects the group’s confidence in market fundamentals. While some voluntary cuts remain in place through 2026, the group plans to continue monthly reviews to monitor conditions.
Pressure built on Russia last week as US President Donald Trump issued a 10-day ultimatum until August 8 for the country to broker peace with Ukraine or face new sanctions. These include aggressive secondary tariffs of possibly as high as 100% on countries continuing to import Russian crude.
The threat unsettled major buyers, particularly India, which may face tough decisions on the sustainability of its Russian oil imports.
Markets, however, believe that any supply gaps caused by new sanctions could be filled by increased flows from the Middle East given the outcome of the OPEC+ meeting over the weekend. Brent crude closed Friday’s trading session trading at US$69.35/bbl, reflecting the market’s sensitivity to upcoming OPEC+ decisions and geopolitical risks.
The average year-to-date price of the commodity closed the week at US$70.46/bbl, 11.76% lower than its average price in 2024. Bonny light also ended the week in the green, gaining 1.91% to US$74.76/bbl. #Naira Gains as Nigeria’s External Reserves Hit 6-Month High#
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