Nigerian Naira Holds Steady Amid Market Liquidity Pressures

The Nigerian naira traded with modest movements across both official and parallel foreign exchange markets as market participants weighed ongoing liquidity management by the Central Bank of Nigeria against persistent demand for foreign currency. At the official Nigerian Foreign Exchange Market, the United States dollar exchanged at an average rate of ₦1,346.51, holding within a narrow band between ₦1,343.35 and ₦1,347.32 per dollar.

Meanwhile, activities in the parallel market showed the dollar trading between ₦1,410 and ₦1,430 for buying and selling transactions depending on the location and local currency dealer. Financial analysts noted that this mild divergence between official rate outcomes and informal channels continues to reflect spot demand from small-scale importers and individual retail buyers seeking prompt foreign currency access outside primary banking channels.

Over a broader 12-month period, the naira strengthened by about 6.26 percent against the United States dollar, recovering from ₦1,436.74 recorded in November 2025. This appreciation has helped ease foreign exchange costs for businesses and consumers dependent on imported goods and services, while also lowering the naira cost of servicing dollar-denominated liabilities for manufacturers.

The currency appreciation has occurred alongside stable foreign reserves, which stood at $55.133 billion, providing a crucial buffer for external obligations and central bank stabilization efforts. Central Bank of Nigeria Governor Olayemi Cardoso emphasized that the currency must remain market-driven and competitive, noting that the apex bank is committed to a transparent, liquid foreign exchange market driven by willing buyers and willing sellers.

Despite these gains, the parallel market saw the naira weaken slightly to an average of ₦1,394 to the dollar amid increased demand for foreign exchange, seasonal payment obligations, and a stronger U.S. dollar globally. Analysts at Cowry Asset Management Limited indicated that the currency is expected to remain relatively stable in the near term, supported by continued foreign exchange interventions and liquidity improvements by the central bank.

External factors, including a decline in crude oil prices and movements in the U.S. Dollar Index, continue to influence the local currency's performance. Sustained crude oil earnings and improved foreign exchange inflows remain critical factors in determining the supply position and the central bank's capacity to support the market against external pressures.

In the wider domestic economy, Nigeria’s stock market has experienced substantial growth, gaining about 62 percent since January. The All-Share Index closed at 252,456.74 points following the country's return to the FTSE Frontier Index in September, reflecting increased activity and capital inflows from global funds tracking frontier markets.