Naira gains N27 in weekly trade as external reserves cross $50bn

The naira strengthened against the dollar in the official market during the week, supported by rising external reserves and improved liquidity conditions in the Nigerian Foreign Exchange Market (NFEM).

Data published by the Central Bank of Nigeria (CBN) showed that the local currency appreciated by N27.03 week-on-week, representing a 1.98 percent gain. The naira closed at N1,366.23 per dollar on Friday, compared with N1,393.26 quoted the previous Friday.

On a day-on-day basis, the currency also recorded a modest gain, strengthening by N5.28 or 0.4 percent from N1,371.51 per dollar quoted on Thursday.

Across the five trading sessions of the week, the naira appreciated by N39.39 or 2.88 percent, rising from N1,405.62 per dollar quoted on Monday, the first trading day of the week.

The improved performance in the official market came amid rising foreign exchange liquidity and renewed confidence following sustained growth in the country’s external reserves.

In the parallel market, also known as the black market, the naira ended the week at N1,410 per dollar on Friday. This represented a gain of N10 or 0.71 percent week-on-week from N1,420 per dollar recorded at the close of the previous week.

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On a day-on-day basis, the parallel market rate remained broadly stable, though the gap between the official and parallel market exchange rates widened during the week. The spread expanded to N44 on Friday compared with a difference of N27 recorded in the prior week.

The naira had earlier rebounded to N1,376.19 per dollar on Wednesday after depreciating for 15 consecutive trading sessions in the official foreign exchange market. The recovery followed the Central Bank of Nigeria’s resumption of dollar sales into the market, alongside sustained growth in the country’s external reserves.

Nigeria’s external reserves continued their upward trajectory during the week, crossing the $50 billion threshold. The reserves rose to $50.45 billion, representing a 0.24 percent increase compared with the $49.90 billion recorded in the previous week, according to figures published on the Central Bank’s website.

The rising reserve level has strengthened the country’s foreign exchange buffers and improved liquidity in the currency market.

Olayemi Cardoso, governor of the Central Bank of Nigeria, said recent improvements in the foreign exchange market reflect the outcome of deliberate policy measures aimed at restoring confidence and improving transparency.

“Today, the foreign exchange market operates with far greater liquidity and efficiency. The backlog of unmet demand has been cleared, and market participants are able to transact without relying on extraordinary Central Bank interventions,” Cardoso said.

He added that the country has also witnessed a significant increase in foreign investment inflows.

“We have also seen almost a 200 percent increase in capital and investment flows between 2023 and 2025. To be clear, the relative stability of the currency we are seeing today is not an accident but the result of deliberate efforts to rebuild trust and strengthen the confidence of both domestic and international investors.”

According to him, the growth in Nigeria’s external reserves reflects structural improvements in the country’s balance of payments and stronger investment flows into the economy.

“Our external reserves have recently exceeded $50 billion, reflecting structural improvements in our balance of payments and increasing investment flows into the Nigerian economy,” he said.

Cardoso also noted that reforms in the foreign exchange market have eliminated distortions and improved transparency.

“Our commitment to transparent, well-governed, and functional markets is also clear in the foreign exchange market. Through deliberate policy actions, we eliminated the system of multiple exchange rates that had previously benefited only a privileged few.”

He said the reforms have significantly narrowed the gap between official and parallel market rates.

“At the same time, we reduced the parallel market premium from around 50 percent in 2022 to less than 2 percent on average in 2025,” Cardoso said while speaking in Lagos.

The Central Bank governor had earlier disclosed at the conclusion of the 304th Monetary Policy Committee meeting held in Abuja last month that Nigeria’s external reserves had risen to $50.45 billion.

He noted that the reserve position provides approximately 9.68 months of import cover, offering a stronger cushion against external shocks and enhancing the country’s macroeconomic resilience.

Cardoso also highlighted a sharp improvement in Nigeria’s net external reserve position over the past two years.

According to him, net external reserves surged by 772.18 percent, rising to $34.80 billion at the end of 2025 from $3.99 billion recorded in 2023.

He explained that the sharp increase reflects a fundamental improvement in the quality and sustainability of the country’s external buffers.

The 2025 net reserve position alone exceeded the total gross reserves recorded at the end of 2023, which stood at $33.22 billion.

Cardoso attributed the improvement to increased transparency and credibility in foreign exchange management, which he said has strengthened investor confidence, attracted stronger foreign exchange inflows, and improved reserve management practices.

He added that the Central Bank’s strategy has focused on capital preservation, liquidity management, and long-term sustainability in order to ensure that Nigeria’s external reserves remain resilient in the face of global economic uncertainties.