Naira Gains on Robust FX Liquidity Strength, Weaker US Dollar
The Nigerian local currency, the naira, gained value at the foreign exchange market due to the strength of available US dollars on the supply side.
The local unit closed at N1347 per greenback after the US Treasury announced a plan to double its bond-buying to $4 billion, providing significant liquidity and sending the US dollar reeling in global markets.
While US 10- and 30-year yields are a couple of basis points firmer, the US dollar is softer against most currencies today. Broadstreet analysts told MarketForces Africa that financial institutions’ activities at the Nigerian foreign exchange market (NFEM) increased moderately.
FX analysts noted that, although interbank FX turnover improved, the number of transactions at the NFEM window increased much faster.
Daily FX update released by the Central Bank of Nigeria (CBN) showed that interbank turnover at the NFEM window increased by 10% to $371.788 million from $370.98 million reported the previous day.
The number of interbank deals among financial institutions acting as market makers increased to 134 on Thursday, up from 100 the previous day.
Transactions were consummated between N1347 and N1351.5000 during the trading session, with the average NFEM rate closing at $1347.6284 per dollar, FX data obtained by MarketForces Africa revealed.
The naira also strengthened against the British Pound, gaining 0.02% at NAFEM and 0.53% in the parallel market. Against the Euro, the Naira depreciated marginally by 0.04% at NAFEM to ₦1,574.97, while gaining 0.31% in the parallel market.
Foreign Exchange Reserves rose by c. $74.21 million, from about $52.58 billion on 18 August to $52.66 billion on 19 August, as reported by the CBN.
Overall, the market continues to show relative stability, supported by ongoing refinements in monetary and fiscal policy, analysts at AIICO Capital Limited said in a note.
The firm expects the naira to remain broadly stable in the near term, supported by improving FX liquidity and rising reserves.
However, persistent dollar demand and the gap between the official and parallel markets could limit further appreciation. Market direction will remain dependent on FX inflows, reserve accumulation, and demand pressures. Naira Approaches 2026 Estimated Fair Value as Rally Extends
