Naira loses N15 in black market despite 17-year high reserves

After holding steady at N1,385 per dollar for the past month, the naira cooled in the parallel market, also known as the black market, on Tuesday despite Nigeria’s external reserves climbing to a 17-year high.

Data gathered from street traders in Lagos and online rate-tracking platforms showed that the naira depreciated by N15 to N1,400 per dollar on Tuesday, representing a 1.07 percent decline from N1,385, where it had traded for most of the past month.

At the Nigerian Foreign Exchange Market (NFEM), however, the local currency remained largely stable. The dollar was quoted at N1,362.84 on Monday, a marginal depreciation of 63 kobo from N1,362.21 recorded on Friday, according to data published by the Central Bank of Nigeria (CBN).

As a result, the gap between the official and parallel market exchange rates widened to N38 per dollar on Tuesday from N23 on Friday.

Trading activity at the NFEM strengthened significantly. Total turnover rose by 58.99 percent to $598.57 million on Monday from $376.48 million recorded on Friday, an increase of $222.09 million. However, the number of deals declined by 3.62 percent to 266 from 276 deals over the same period.

At the interbank segment, the number of deals remained unchanged at 90, while total turnover increased by 25.39 percent to $92.25 million on Monday from $73.57 million on Friday.

Nigeria’s external reserves, which provide the CBN with the capacity to support the naira and meet external obligations, continued their upward trajectory, reaching $50.12 billion as of June 5, 2026.

The reserve level represents a 30.93 percent year-on-year increase from $38.28 billion recorded on June 5, 2025. It is also the highest level in 17 years. According to data on the CBN website, the last time reserves exceeded the $50 billion mark was on January 26, 2009, when they stood at $50.58 billion.

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At the end of December 2025, the apex bank projected that external reserves would rise to $51.04 billion in 2026, supported by reduced pressure in the foreign exchange market, stronger oil earnings, and sustained inflows from remittances and foreign portfolio investments.

The latest reserve position indicates that the country is on course to achieve that target, reflecting the impact of tighter monetary policy, improved foreign exchange liquidity, and stronger capital inflows.

Meanwhile, Bismarck Rewane, managing director and chief executive officer of Financial Derivatives Company (FDC), said the naira remains undervalued by more than 13 percent despite extensive foreign exchange reforms and recent stability in the currency market.

Speaking at the Lagos Business School Breakfast Session, Rewane said an assessment based on purchasing power parity suggests the local currency is trading below its fair value.

“Compared to the NFEM rate of N1,374.92 to the dollar, the naira is undervalued by 13.22 percent,” Rewane said.

He noted that the naira has experienced significant volatility in recent years following the liberalisation of the foreign exchange market.

According to him, the currency weakened from about N410 per dollar in 2021 to more than N1,900 per dollar in 2024 as reforms removed longstanding distortions in the market.

While acknowledging the sharp depreciation, Rewane argued that the reforms have improved transparency, enhanced market efficiency, and narrowed the gap between official and parallel market exchange rates.

“The naira has lost more than 200 percent of its value between 2023 and 2026, but the reforms have improved FX market efficiency and reduced distortions,” he said.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.