Naira down slightly as FX liquidity drops by 55.23%

The naira depreciated slightly on Monday in the official foreign exchange (FX) market as liquidity at the Nigerian Foreign Exchange Market (NFEM) window declined sharply by 55.23 percent.

Data published by the Central Bank of Nigeria (CBN) showed that the naira weakened by N2.66 against the dollar, with the exchange rate closing at N1,373.70 on Monday compared to N1,371.04 quoted on Friday, representing a 0.19 percent depreciation at the NFEM window.

Market turnover at the NFEM window dropped significantly by $281.24 million to $227.98 million as of May 15, 2026, from $509.22 million recorded on May 14, 2026.

The number of deals executed at the same window also declined by 26.29 percent to 213 transactions from 289 deals recorded in the previous trading session.

However, activity at the interbank segment of the market improved during the period. The number of deals increased to 92 on Monday from 58 recorded on Friday, representing a 58.62 percent increase.

Similarly, total turnover at the interbank market rose by 57.33 percent to $76.29 million on Monday compared to $48.49 million posted on Friday.

In the parallel market, also known as the black market, the naira appreciated slightly, strengthening by N5 to close at N1,390 per dollar from N1,395 quoted last week.

As a result, the gap between the official and parallel market exchange rates narrowed to N17 on Monday from N24 recorded last week, indicating a slight convergence between both market segments.

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Nigeria’s external reserves, which provide the CBN with the capacity to support the naira and meet external obligations, continued their upward trend over the past week.

Data published on the CBN website showed that the country’s reserves rose by $260 million or 0.54 percent to $48.57 billion as of May 15, 2026, compared to $48.32 billion recorded on May 7, 2026.

Meanwhile, a report by the Financial Markets Dealers Association (FMDA) showed that total FX utilisation rose sharply in 2025, driven largely by invisible related transactions, particularly demand linked to financial services.

According to the report, while the industrial sector remained the largest merchandise-related source of FX demand at $8.43 billion, invisible-related FX utilisation surged to $27.27 billion, exceeding total goods imports.

FMDA noted that the increase in industrial-sector FX demand reflects expanding domestic production activities, which continue to drive imports of machinery, industrial inputs, and intermediate goods required for manufacturing and infrastructure-related projects.

The report added that the sharp rise in financial-services utilisation points to increased cross-border financial transactions and deeper participation within the formal FX market.

FX demand from the oil sector also rose significantly in 2025, likely reflecting higher refinery-related imports and increased energy-sector activities.

“Together, these trends indicate that Nigeria’s FX demand structure is becoming increasingly diversified, with invisible transactions now exerting greater influence on overall FX liquidity conditions alongside traditional merchandise imports,” analysts at FMDA 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.