The naira moved closer to convergence on Monday, appreciating further in the black market and remaining flat in the parallel market.
This is as foreign exchange (FX) inflows rose 75 percent to $1.31 billion week-on-week, largely driven by foreign portfolio investors’ participation last week.
The naira rates have further narrowed the exchange rate disparity between the official and the unofficial markets to N2 per dollar.
Traders exchanged one dollar at N1,530 in the parallel market, commonly referred to as the black market on Monday. This marked a gain of N7 or 0.45 percent from N1,537 traded on Friday, according to data gathered from street traders.
At the Nigerian Foreign Exchange Market (NFEM), the naira also strengthened slightly, gaining N0.77 as the dollar was quoted at N1,532.34 on Friday, up from N1,533.11 on Thursday, indicating a 0.05 percent appreciation.
FX inflows
According to a report by Coronation Merchant Bank, total FX inflows for the week climbed to $1.31 billion, up sharply from $750 million in the previous week, representing a 75 percent increase over the period.
FPIs accounted for 62.50 percent of these inflows, continuing their dominance for the ninth consecutive week and reinforcing investor interest in Nigeria’s fixed income assets.
Non-bank corporates contributed 14.08 percent; exporters, 12.76 percent; while the Central Bank of Nigeria (CBN) made up 9.86 percent. Other corporates and individuals contributed marginally with 0.33 percent and 0.34 percent, respectively.
Meanwhile, Nigeria’s gross external reserves rose by $500 million or 1.3 percent week-on-week, reaching $37.93 billion as of July 18, 2025, up from $37.43 billion recorded on July 11, 2025, according to data from the CBN. This uptick likely reflects a mix of improved oil receipts, inflows from multilateral sources, and reduced direct interventions by the CBN in the FX market.
According to analysts at Coronation, in the near term, the naira is expected to trade within a narrow range, supported by improved FX supply across both official and parallel markets. Sustained FPI participation, especially in fixed income markets, and steady export receipts are expected to bolster liquidity. However, risks remain, including volatile oil prices, external debt servicing pressures, and global interest rate fluctuations, which could influence reserve levels and exchange rate movements.
The report noted that last week, the naira held steady at the NAFEM window, appreciating slightly by N2.12 or 0.14 percent week-on-week to close at N1,532.34 per dollar. The modest gain was underpinned by stronger FX inflows, particularly from exporters and non-bank corporates, as well as the continued interest of FPIs. The currency traded as strong as N1,518.89 during the week, reflecting improved mid-week liquidity conditions.
In the black market, the naira also gained N5 or 0.32 percent to close at N1,540 per dollar, compared to N1,545 in the previous week. The narrowing spread between official and parallel market rates reflects strengthening sentiment and easing demand-side pressures.
Murtala Sagagi, a member of the Monetary Policy Committee (MPC), had noted in his personal statement that, “The value of the naira has been relatively stable even though it is still considered undervalued. It is projected that the naira would appreciate to N1,450 per US dollar by the end of 2025.”
A report by United Capital Plc noted that the naira appreciated modestly in the first half (H1) of 2025, rising from N1,535.82 per dollar on December 31, 2024, to N1,529.71 on June 30, 2025, and remaining relatively stable at N1,533.11 as of July 17, 2025.
This appreciation has been attributed to growing investor confidence in Nigeria’s economy, the CBN leadership, increased FX availability for legitimate demand, and a reduction in imports alongside improved export performance.
On the external front, Nigeria’s crude oil production rose to 1.51 million barrels per day (mbpd), slightly above the Organization of the Petroleum Exporting Countries (OPEC) quota. The average oil price for H1 2025 was $73.46 per barrel, just below the 2025 budget benchmark of $75 per barrel. Nevertheless, new investments in the energy sector are expected to enhance production capacity in the near future. (BusinessDay)
