Naira Strengthens as Dollar Falls, External Reserves Cross $40bn for First Time in Months
- The Nigerian currency has risen in value again against the US greenback, driven by more robust external reserves
- Data from the Nigerian Foreign Exchange Market (NFEM) shows that the local currency gained N2 compared to the previous day’s rate
- Following the growing external reserves and improved oil production, analysts say the naira’s outlook is very positive
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The naira appreciated against the US dollar at the Nigerian Foreign Exchange Market (NFEM), closing at N1,534.82 per dollar on Wednesday, August 13, 2025, according to data from the Central Bank of Nigeria (CBN).
This marks a gain of over N2 from the previous day’s close of N1,537.09.
Source: Getty Images
External reserves climb past $40bn
Market watchers say the rally was driven by a slowdown in demand for foreign currency, alongside an increase in foreign exchange inflows from exporters.
Intraday data showed the naira reached a high of N1,536.50, a significant improvement from the N1,543 intraday high recorded the previous day.
Analysts say the reduced volatility signals a cooling of recent pressure in the FX market.
In a major boost to investor sentiment, Nigeria’s external reserves rose to $40.292 billion, the highest level in months.
The increase is being linked to higher oil production and improved crude export earnings, which have supported the Central Bank’s ability to intervene in the FX market when necessary.
The parallel market rate diverges again
Rising reserves are often seen as a safety buffer for the naira, reassuring both foreign and local investors that the CBN can meet short-term foreign exchange needs without depleting its stockpile.
However, while the official market showed gains, street trading told a different story.
The naira was quoted at N1,550 per dollar in street trading, widening the gap between the two markets to N15.18.
Earlier in the week, both rates had converged around N1,535, sparking optimism for exchange rate stability.
However, renewed demand pressures in the parallel market have opened up a fresh divergence.
Global market movements impact sentiment
Beyond Nigeria, global commodity and currency markets also influenced investor behaviour.
Brent crude prices slipped 61 cents to $66.51 per barrel, while US WTI fell 68 cents to $62.49, following data showing an unexpected rise in US crude inventories.
On the precious metals front, gold prices inched higher as the dollar weakened and US Treasury yields fell.
Spot gold rose 0.18% to $3,353.95/oz, while US gold futures settled $2.10 higher at $3,403.52.
The gains were driven by investor expectations that the US Federal Reserve could cut interest rates in September, with further easing likely before year-end.
Analysts say these global trends could influence Nigeria’s export earnings and FX stability in the coming weeks.
Outlook favourable for naira
With rising reserves, stronger exporter inflows, and easing demand pressure, analysts believe the naira’s short-term outlook is tilting positive.
However, they caution that sustained gains will depend on maintaining oil production levels, attracting more foreign investment, and keeping speculative demand in check.
Source: Getty Images
If the current trend holds, the CBN may not need aggressive interventions in the coming weeks, allowing the market to find its own balance.
CBN releases naira's ranking among global currencies
Legit.ng earlier reported that the CBN has described the naira as one of the most secure currencies in the world.
Speaking at the bank’s flagship sensitisation event, the CBN Fair, in Lagos, Paul Onuoha of the Currency Operations Department called on Nigerians to handle the naira notes with integrity.
The event brought together entrepreneurs, financial institutions, fintech operators, consumer protection agencies, market leaders, students, and youth groups.
Source: Legit.ng
