The naira strengthened against the dollar last week, gaining N13 to close at N1,322.50 per dollar at the Nigerian Foreign Exchange Market on September 4 and 5. The currency appreciated by 0.97 per cent from its opening rate of N1,335.50 on August 31.
The naira strengthened steadily during the week, moving from N1,335.50 per dollar on Monday to N1,329 on September 1 and N1,324.50 on September 2 before settling at N1,322.50. The movement came amid continued improvement in Nigeria’s external reserves and foreign exchange position.
According to FMDQ’s weekly Foreign Exchange Market Analysis Report, total turnover in the spot and derivatives markets fell by 21.38 per cent to $2.44 billion in the week ended September 4, from $3.07 billion the previous week. Foreign exchange spot transactions accounted for $2.34 billion, down 20.55 per cent from $2.95 billion, while derivatives turnover fell by 41.59 per cent to $71.7 million.
Nigeria’s external reserves crossed the $54 billion mark during the week, reaching $54.08 billion on September 3, according to Central Bank of Nigeria data. The reserves stood at $53.99 billion on September 2 and $53.90 billion on September 1, putting the position above the CBN’s $51.04 billion year-end target.
The latest reserves figure also places Nigeria’s external buffer at a level capable of covering more than 12 months of imports, while the liquid portion stood at $53.55 billion. The reserves have risen from $49.80 billion at the start of June, crossing $50 billion on June 5, reaching $50.81 billion on June 15 and climbing to $51.9 billion by July 31.
The sustained increase has been attributed to stronger foreign exchange inflows, including higher oil earnings, and improved liquidity conditions in the external sector. The stronger reserve position provides the CBN with greater capacity to support the naira and meet the country’s external obligations.
CBN Governor Olayemi Cardoso said the stronger reserve buffer was reinforcing investor confidence and supporting exchange rate stability. He also linked improved confidence to the CBN’s clearance of more than $7 billion in unsettled foreign exchange backlogs, saying the move supported dollar inflows and further accumulation of external reserves.
