Naira Outlook Positive as All FX Forward Contracts Appreciate
The naira outlook has been judged to be posiitve as all foreign exchange forward contracts appreciated amidst uncertainties about Nigeria’s export earnings due to decision of the members of the Organisation of Petroleum Exporting Countries and allies members to ramp up output.
Last week, the naira strengthened against the US dollar in the foreign exchange market on growing support from the Central Bank (CBN). Forward FX contract appreciated across tenors as market anticipates a rise in value of the Nigerian naira with the Apex Bank FX injections already price in the expected momentum.
There is growing debate that the naira is undervalued in the spot market due to Nigeria’s inability to harness her revenue generation capability optimally. Financial experts told MarketForces Africa that forward fx contract appreciation suggest that the market expects naira spot rate to be lower at the time of the forward contract settlement.
“The naira is expected to remain relatively stable in the near term, supported by sustained interventions from the CBN and a gradual easing of global pressures.
“However, a significant appreciation appears unlikely, as foreign exchange liquidity remains tight due to weak foreign portfolio inflows and lingering global uncertainty”, Cordros Capital Limited said in an update.
The Exchange rate stability kicked after series of fx sales to authorised dealer banks to ensure sufficient liquidity was available to meeting growing corporate demand.
The naira traded strong, according to data obtained from the Central Bank amidst $120 million in fx intervention sales in the period. The local currency showed resilience despite rising demand pressures, analysts said, adding the exchange rate will remain range bounded in the absence of significant shock or reduced FX inflows into the currency market.
The naira rate opened strong, buoyed by decent liquidity and end-of-month flows, trading mostly within the $/₦1,575–₦1,595 range in the official window. Last week, the CBN intervened twice, selling an estimated $120 million cumulatively to support liquidity, with bids cleared between ₦1,581.92 and ₦1,593, according to AIICO Capital Limited.
Naira fixings fluctuated, initially strengthening to ₦1,584.38 before weakening midweek to ₦1,592.67, and finally settling at ₦1,586.15—reflecting a 36bps depreciation. The investment firm stated that FX Market momentum was driven by local demand and exporter flows, with NAFEX trades ranging from ₦1,500 to ₦1,600.14.
The CBN intervention or forex market injections however impacted the foreign reserves. Data obtained from the CBN showed that the nation’s foreign reserves declined by $85.93 million week on week to $38.46 billion as of May 29, 2025.
In the forwards market, the naira rates appreciated across contracts. The 1-month FX forward contract rose by +0.1% to N1,621.61, 3-month contract climbed by +0.1% to N1,681.37. FX market report showed that the 6-month fx forward contract appreciated by +0.0% to N1,767.48 while 1-year contract edged higher by +0.1% to N1,936.39 per dollar. .
With the recent decision of the OPEC and allied members to ramp up out, analysts predict that crude price could move negatively, with drastic impacts on Nigeria’s foreign receipt. U.S. crude prices declined on Friday as markets anticipated that OPEC+ would announce a larger-than-expected increase in July oil production during its Saturday meeting.
Brent crude futures dropped 25 cents, or 0.39%, to settle at $63.90 per barrel, while U.S. West Texas Intermediate (WTI) crude slipped 15 cents, or 0.25%, to $60.79, after earlier falling over $1. #Naira Outlook Positive as All FX Forward Contracts Appreciate
