Naira Exchange Rate Jumps to Highest Level in 6 Months on Rising External Reserves
- The naira's value has climbed to a six-month high in the official foreign exchange market, according to new data
- Nigerian currency's strong performance was supported by improved liquidity and stronger reserves
- Exchange rates for the British pound and euro also improved in the official exchange rate window
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The naira exchange rate has surged to a six-month high, trading at N1,514.86 per dollar in the official FX markt on Thursday, September 4, marking the week’s final trading day after a federal government-declared public holiday.
Thursday's rate represents an improvement from the previous day’s close of N1,521.45, according to data released by the Central Bank of Nigeria (CBN).
The last time the naira traded stronger was on March 6, 2025, when it closed at N1,512.30/$1 in the official market.
Source: Getty Images
Also, GTBank quoted an exchange rate of N1,533/$1 for international transactions on Thursday, slightly lower than N1,534/$1 on Wednesday.
Naira's strong performance is supported by sustained increases in liquidity and external reserves.
Naira holds steady at parallel market
In the parallel market, also known as the black market, the naira was unchanged at N1,535/$1.
Despite the holiday, traders in the black market continued their business.
Abudullahi one of the traders gave the latest exchange rate as follow:
“As of 5th September, 2025, the exchange rates are USD at N1,523 to N1,535, Euro at N1,760 to N1,775, and Pound at N2,065 to N2,085.”
Source: Getty Images
Reserves and FX flows
Nigeria’s foreign currency reserves stood at $41.30 billion as of September 4, 2025, down slightly from a four-year high of $41.49 billion recorded the previous day, CBN data showed.
Total FX inflows into the economy rose 4% quarter-on-quarter (q/q) and 26% year-on-year (y/y) to $29 billion in Q1 2025, continuing a trend since Q4 2023.
The increase was driven largely by the CBN’s tight monetary policy.
However, FX outflows grew at a faster pace, up 14% q/q and 33% y/y to $13.8 billion, the highest since Q2 2020.
As a result, net FX flows stood at $15.2 billion, slightly below $15.8 billion in Q4 2024.
Analysts’ view
FBNQuest analysts noted that strong inflows in Q1 2025 came mainly from autonomous sources, which surged to $20.7 billion from $16.3 billion in Q4 2024 — the highest since the COVID-19 pandemic, though below $27.5 billion in Q1 2020.
The rise was attributed to high interest rates attracting carry trade flows and CBN’s FX reforms improving transparency and price discovery.
External reserves rises
Earlier, Legit.ng reported that the Central Bank of Nigeria (CBN) revealed that Nigeria’s foreign exchange reserves is on the rise.
This was the highest level FX reserves reached in 44 months, almost four years.
The latest level of Nigeria’s foreign reserves was the highest since December 3, 2021, marking a significant recovery after months of depletion caused largely by external debt repayments.
Proofreading by Funmilayo Aremu, copy editor at Legit.ng.
Source: Legit.ng
