The naira recorded marginal gains on Monday across the official foreign exchange (FX) market, bolstered by strong inflows led by non-bank financial entities and exporters, who jointly accounted for over 62 percent of total FX supply.
Data from the Central Bank of Nigeria (CBN) showed that the naira appreciated by N5.72 at the Nigerian Foreign Exchange Market (NFEM), closing at N1,600.43 per US dollar, compared to Friday’s rate of N1,606.15. This represents a 0.4 percent gain for the local currency.
Non-bank institutions—including asset managers, pension funds, and Bureau de Change operators—made up 34.27 percent of the inflows, while exporters contributed 28.17 percent. The CBN and foreign portfolio investors (FPIs) followed with 18 percent and 16.78 percent respectively, according to a report by Coronation Merchant Bank.
Total inflows into the NFEM declined slightly to $619 million, down 7.34 percent from the $668 million recorded the previous week.
Despite the CBN’s efforts to stabilise the currency, the naira held steady at N1,625 in the parallel market, based on information from FX dealers and market platforms.
Last week, the naira depreciated by 0.25 percent at the official market, closing at N1,606.15. Forward contract rates showed a continued expectation of weakness, with one-month, three-month, six-month, and one-year contracts closing at N1,641.59, N1,707.37, N1,799.21, and N1,988.66 per dollar, respectively. In the informal market, the naira weakened by 0.93 percent over the same period.
In a related development, the World Bank, in its Nigeria Development Update report titled Building Momentum for Inclusive Growth, noted that Nigeria’s FX market remains largely influenced by central bank interventions and FPI flows, despite ongoing liberalisation reforms.
The report acknowledged improved FX turnover and market stability, crediting the CBN’s recent regulatory changes, including the establishment of a new interbank trading platform and updated operational guidelines introduced in late 2024.
The World Bank also pointed to reforms in the Bureau de Change segment, which now allows temporary access to the interbank market via authorised dealers—a move seen as narrowing the gap between official and retail exchange rates.
Furthermore, Nigeria’s current account balance improved significantly in 2024, rising by 185 percent to $17.2 billion, or 9.2 percent of GDP. This was attributed to reduced imports and increased formal remittances, which climbed to $21 billion. While oil revenues declined, non-oil exports grew by 25 percent, supported by a weaker and more competitive naira.
Foreign portfolio investment surged by 110 percent to $13 billion, driven by attractive yields and greater transparency in the FX space. However, foreign direct investment remained subdued, staying below 1 percent of GDP due to ongoing structural barriers.
Net outflows under the “other investments” category persisted, largely reflecting repayments on foreign debt—a sign that Nigeria’s external financing conditions remain under strain even as FX reforms take root.
