Naira Rallies Market-Wide on Robust US Dollar Supply
The Nigerian naira saw a market-wide rally on Monday, reflecting the absence of significant pressure from dollar demand for foreign payments. Both informal and official markets experienced robust FX supply that eclipsed demand for foreign payments in dollars.
The Central Bank of Nigeria (CBN) updated FX data showed that the naira strengthened by 0.12% to ₦1,421.46/$ at the Nigerian Foreign Exchange Market (NFEM) window, supported by foreign portfolio investors’ inflow with support from non-bank corporate supply.
The exporters’ inflows also boosted the supply, with the Apex Bank playing its watchdog role in the currency market. The spot FX rate movement signalled an absence of forex market pressure amidst fresh undervaluation discussion across the Broadstreet.
A slew of FX traders are pitching that the naira was significantly undervalued in the currency market last year, though the spot rate closed stronger by 7.5%, the first annual gain recorded in 13 years.
In the parallel market, the local currency popped higher by 0.14% to ₦1,464/$, reflecting improved currency sentiment and reduced pressures across both the regulated official segment and the informal foreign exchange market.
Last week, the Naira appreciated, strengthening to a midweek high of N1,418.26/US$ in the NAFEM market before easing to N1,423.17/US$ at the close of the week, representing a 0.54% week-on-week gain.
“We anticipate that the CBN will emphasise exchange rate stability over rapid appreciation through 2026, supported by prudent policy execution and effective reserve management,” Coronation Merchant Bank research subsidiary said in an update.
In the global commodity market, crude oil increased as U.S halted supply to Cuba amidst plan to probe Federal Reserve chair Jerome Powell, raising concern over policy rate in the first quarter of 2026. Brent crossed $63 per barrel, and WTI was sold above $59.
Last week Brent crude prices ended higher, supported by increased geopolitical risk. Markets were on edge over potential political instability in Venezuela, following the US’ capture of President Maduro and announced moves to control Venezuelan oil revenues and potentially release tanked crude which had been trapped by sanctions.
This added uncertainty about future supply flows despite the already over-supplied market. At the same time, intensifying protests and unrest in Iran raised fears of possible supply disruptions from one of the world’s major producers, helping lift oil risk premiums.
These developments helped push Brent to US$62.99/bbl by the end of the week, marking a weekly gain of about 3.62% (the commodity is already tracking a year-to-date gain of 3.52%) despite an underlying global supply surplus that continues to weigh on prices.
This week, we expect traders to continue balancing abundant inventories and ongoing oversupply concerns with heightened geopolitical risk from Venezuela and Iran; this should determine the direction for prices through the week. Naira Diverges as Informal Sector’s FX Liquidity Tightens
