The Nigerian naira weakened to its lowest level in over a week in the parallel market on Tuesday, trading at ₦1,565 per US dollar, according to Lagos-based currency traders cited by Nairametrics. This marks a fresh dip from ₦1,550/$1 recorded in the previous two trading days Monday and Friday and a further slide from ₦1,540/$1 last Thursday.
Despite consistent reassurances from the Central Bank of Nigeria (CBN) on exchange rate stability, the naira has struggled to hold firm on the informal market. Over the past week, it had hovered between ₦1,535 and ₦1,550, showing short-lived strength before succumbing to fresh demand pressure.
Meanwhile, on the official market, the naira closed at ₦1,533.85/$1 on Monday, slightly stronger than Friday’s close of ₦1,535.50/$1, according to data published by the CBN.
Foreign Reserves Climb to $39.5 Billion in August
In a positive turn, Nigeria’s external reserves rose by 6.18% month-on-month, reaching $39.5 billion as of August 1, up from $37.2 billion on July 1. Analysts view this increase as a sign of improving liquidity and foreign investor interest, largely driven by higher oil earnings, non-oil exports, and inflows from foreign portfolio investors.
Economist and capital market analyst, Charles Nwodo, told BusinessDay that “the rising reserves give the apex bank more room to intervene when necessary. It also enhances investor confidence in Nigeria’s macroeconomic environment.”
The CBN has continued to highlight these improvements as evidence that ongoing monetary reforms are yielding results. At the last Monetary Policy Committee (MPC) meeting, CBN Governor Olayemi Cardoso emphasized the impact of the bank’s strategies on FX stability and capital inflow.
“The foreign exchange market is working a lot better and more smoothly the result of which has encouraged inflows into that market,” Cardoso said.
He added that Nigeria is no longer in the dire FX position it faced before the removal of subsidies and other structural reforms. According to him, despite short-term pains, the country is gradually witnessing improved trade surplus and restored investor trust.
Interest Rate Held at 27.5%
In a bid to maintain economic stability amid inflationary pressures, the CBN also held the Monetary Policy Rate (MPR) steady at 27.5% at its 301st MPC meeting. All 12 committee members voted unanimously for the decision, underscoring a shared commitment to fight inflation and stabilize the naira.
“The MPC also notes the sustained stability in the foreign exchange market, accentuated by improved capital flows, earnings from increased crude oil production, rising non-oil exports, and significant investments,” the MPC communique stated.
What Lies Ahead
While the rise in reserves and official rate stability signal positive momentum, the persistent gap between the official and parallel markets remains a concern. The widening spread could signal a return of speculative activity and low FX supply in the informal market.
Analysts suggest that the government and CBN need to sustain investor confidence by ensuring transparent FX policies, deepening the supply side, and reducing demand-side distortions such as arbitrage and hoarding.
Until those factors are addressed, the naira’s long-term stability remains subject to volatility despite encouraging macroeconomic data.
