The naira recorded a mild appreciation across Nigeria’s foreign exchange (FX) markets on Tuesday, even as total weekly FX inflows into the Nigerian Foreign Exchange Market (NFEM) fell sharply by 32.9%. The movement reflects the local currency’s relative resilience amid tighter dollar liquidity and sustained investor participation.
Naira Appreciates in Official and Parallel Markets
Data from the Central Bank of Nigeria (CBN) showed that the naira gained 0.12% at the official window, closing at ₦1,463.45/$ compared to ₦1,465.29/$ recorded on Monday.
Similarly, at the parallel market, the local currency appreciated to ₦1,485/$, strengthening from ₦1,495/$ two weeks earlier.
Market analysts attribute the improvement to CBN’s liquidity management strategies and moderate dollar supply from portfolio investors.
Foreign Portfolio Investors Dominate FX Inflows
A report by Coronation Merchant Bank Research indicated that total FX inflows into the NFEM dropped to $1.10 billion last week from $1.64 billion in the previous week.
Despite the decline, foreign portfolio investors (FPIs) accounted for 63.1% ($694.9 million) of total inflows, followed by exporters (15.3%) and non-bank corporates (12.2%).
In contrast, foreign direct investment (FDI) fell to $0.20 million (0.01%), down sharply from $122.2 million (7.5%) a week earlier, reflecting investor caution over Nigeria’s macroeconomic outlook.
According to Olumide Adesina, an investment analyst based in Lagos:
“The naira’s appreciation despite weaker inflows shows improved short-term confidence driven by CBN’s reforms and liquidity management. But the collapse in FDI remains a structural concern for the long term.”
At the official window, the naira weakened 1.37% week-on-week to close at ₦1,475.35/$, while the parallel market strengthened 0.34% to ₦1,490/$. The exchange rate premium between both markets narrowed to 0.99% from 2.74% a week earlier, signaling improved market alignment.
External Reserves Edge Higher
Nigeria’s gross external reserves increased marginally by 0.22%, or $92.5 million, to reach $42.68 billion. The rise was supported by limited outflows and moderate inflows, according to Coronation Bank analysts.
Policy Watch Outlook
Analysts expect the naira to remain stable within its current band in the near term, provided portfolio inflows continue and no major external shocks occur.
However, experts warn that low FDI and weak non-oil export earnings could limit the sustainability of the currency’s recovery if fiscal reforms lag behind monetary adjustments.
Key Takeaways
Naira appreciated 0.12% at the official market to ₦1,463.45/$
FX inflows dropped 32.9% to $1.10 billion
FDI fell sharply to just $0.20 million
CBN policies and Foreign Portfolio Investors remain key to short-term stability
Long-term outlook depends on structural reforms and investor confidence
