Naira Surges to N1,343 as Dollar Liquidity Rises in FX Market
- Nigeria's naira gains 0.92% at the official market due to increased dollar liquidity
- Foreign portfolio investments boost naira demand amid stable intraday exchange rates
- Global oil price decline poses uncertainty for Nigeria's currency and FX inflows
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Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigeria’s currency, the naira, recorded a notable gain against the US dollar at the official foreign exchange market, buoyed by a sharp increase in dollar liquidity.
Data from the Central Bank of Nigeria showed that interbank FX liquidity surged significantly to ₦141.315 million across 175 deals, representing a massive 260 per cent jump from the ₦38.256 million recorded the previous day.
Source: Getty Images
The spike in liquidity reflects renewed confidence in the FX market, as increased dollar availability eased pressure on the local currency.
Foreign inflows drive market momentum
A major driver of the naira’s appreciation was the inflow of foreign portfolio investments, particularly funds channelled into Open Market Operations (OMO) bills.
These inflows boosted demand for the naira while improving dollar supply, creating a more balanced FX environment. As a result, intraday spot exchange rates traded within a relatively stable band of ₦1,334 to ₦1,350 per dollar on Tuesday.
The absence of heavy international payment pressures also contributed to the calmer trading session, giving the naira room to strengthen across markets.
Gains recorded across official and parallel markets
The positive momentum was reflected across both major exchange channels.
At the official window, the naira appreciated by 0.92 per cent to close at ₦1,343.77 per dollar. In the parallel market, often seen as a gauge of retail sentiment, the currency also edged higher, gaining 0.15 per cent to settle at ₦1,371 per dollar.
This dual-market appreciation signals a rare alignment that analysts say could indicate short-term stability in the FX market, especially when supported by sustained liquidity inflows.
Oil price drop adds a layer of uncertainty
While the FX market showed signs of recovery, developments in the global oil market introduced a note of caution.
International crude prices declined sharply on Tuesday amid renewed hopes of diplomatic engagement between the United States and Iran. Brent crude fell by 3.8 per cent to $95.54 per barrel, while West Texas Intermediate dropped 6.1 per cent to $92.85.
According to a report by MarketForces Africa, the decline followed a volatile start to the week, during which prices briefly surged above $100 per barrel after Donald Trump ordered a blockade of Iranian ports following stalled negotiations.
However, tensions appeared to ease after signals emerged that Iran had reopened communication channels with Washington in a bid to reach a new agreement.
Fragile outlook despite short-term gains
Reports suggest that Iran proposed a temporary suspension of uranium enrichment, although disagreements remain between both sides. Still, the possibility of renewed talks has softened fears of supply disruptions, weighing on oil prices.
For Nigeria, a drop in crude oil prices could dampen FX inflows over time, given the country’s reliance on oil exports for dollar earnings.
This creates a delicate balance: while improved liquidity is currently supporting the naira, external factors such as oil price movements and geopolitical developments could quickly shift the trend.
What comes next for the naira?
The naira’s latest rally offers a glimpse of relief in a market that has faced persistent volatility.
However, the sustainability of this appreciation will depend largely on continued FX inflows, investor confidence, and global oil dynamics.
Source: Getty Images
With mixed signals from the international market, the key question remains whether this is the beginning of a stronger recovery or just another temporary rebound.
Naira surges 1.58 as dollar liquidity improves
Legit.ng earlier reported that Nigeria’s currency delivered a surprising boost this week, strengthening by 1.58 per cent at the official market to close at N1,359.32 per dollar, as foreign exchange liquidity showed clear signs of improvement.
The upbeat performance reflects growing confidence among investors, supported by steady interventions from the Central Bank of Nigeria and increased inflows from foreign participants seeking attractive returns.
At the parallel market, the naira also appreciated modestly by 0.36 per cent to settle around N1,373 per dollar.
Source: Legit.ng
