Naira Shows Fluctuating Trend Across Foreign Exchange Markets

The naira experienced a mixed performance over the past week, appreciating by 1.12 percent in the official market while weakening by 0.49 percent in the parallel market.

At the official window, the local currency closed trading at 1,457.95 naira per dollar, an improvement from 1,475.35 recorded the previous week. The gain was attributed to limited interventions by the Central Bank of Nigeria (CBN) and inflows from foreign portfolio investors.

In contrast, at the parallel market, the naira slipped slightly to 1,491.25 per dollar, reflecting ongoing foreign exchange demand pressures and cautious investor sentiment.

Nigeria’s external reserves, however, maintained a steady upward trajectory, rising to 42.87 billion dollars on Wednesday — about 170 million dollars higher than the previous Friday’s figure. The increase was supported by improved oil earnings, stronger non-oil inflows, and a sustained trade surplus, all of which continued to bolster the CBN’s efforts to stabilise the foreign exchange market.

Analysts at Cowry Asset Management projected a mildly pressured outlook for the naira in the near term, citing persistent demand and limited market liquidity. They noted that steady oil receipts and gradual reserve growth could help cushion the local currency.

“In the coming week, we expect the naira to experience mild pressure as FX demand persists amid limited liquidity. However, stable oil inflows and reserve accretion could offer some support,” the firm said.

Experts at Afrinvest Research shared similar views, predicting that the naira would likely trade within current bands across FX segments, barring any major disruptions.

In the long term, the naira is expected to benefit from the CBN’s renewed interest in currency swap arrangements. Speaking at the IMF/World Bank Annual Meetings in Washington, D.C., CBN Governor Olayemi Cardoso noted that while earlier efforts to promote local currency trade agreements were unsuccessful, new frameworks are being developed to ensure future success.

“We have had an experiment with that (switching to national currencies in bilateral trade). It did not work well for us, but we are now developing a new framework, given our currency’s improved competitiveness,” he said.

Investment firm Comercio Partners, in its latest market note titled “The Sequel Nobody Asked For,” described the new naira–yuan swap deal valued at N3.28 trillion as a step toward strengthening trade settlements and reducing reliance on the U.S. dollar.

According to the firm, “Cardoso admitted previous attempts failed due to weak logistics and poor awareness, but with ongoing FX reforms making the naira more competitive, this new arrangement could improve trade ties and stabilise reserves — third time’s the charm, hopefully.”