The Nigerian Naira closed last week on a marginally weaker note in the official foreign exchange market, shedding 0.14% week-on-week to settle at ₦1,532.34 per US dollar.
Despite starting the week strong at a four-month high of ₦1,518.88/$, the local currency lost ground midweek, dipping to ₦1,530.25/$, then ₦1,533.11/$, before closing slightly firmer but still down at ₦1,532.34/$ on Friday.
Naira Faces Supply-Demand Pressure Despite CBN Support
According to data from the Nigerian Foreign Exchange Market (NFEM), the highest exchange rate recorded during the week was ₦1,538/$, while the lowest was ₦1,515/$.
At the parallel market, the Naira traded within a band of ₦1,535/$ to ₦1,544/$, reflecting modest volatility in the unofficial segment.
Market analysts attribute the mixed performance to persistent supply-demand imbalances, although the Central Bank of Nigeria’s (CBN) interventions and improved market liquidity helped cushion sharp declines.
In its weekly update, Cowry Assets Management Limited noted that while the Naira appreciated by 0.06% in the parallel market to close at ₦1,544/$, it weakened slightly in the official window.
“The divergent movements highlight ongoing liquidity challenges and evolving FX market dynamics,” the report stated.
Positive Outlook as Oil Production Improves
Cowry Assets remains cautiously optimistic, citing higher crude oil output and elevated global oil prices as factors likely to increase FX inflows and boost Nigeria’s foreign reserves.
“Stronger oil earnings, combined with steady capital inflows, should offer near-term support to the Naira and help stabilise the FX market,” the firm added.
New data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) revealed that average daily crude oil production (excluding condensates) rose by 3.6% to 1.51 million barrels per day (mbpd) in June 2025, compared to 1.45 mbpd in May.
This marks the first time in five months Nigeria has met its OPEC quota, signalling operational improvements and enhanced security at oil assets—developments expected to boost dollar inflows and reinforce the CBN’s efforts to stabilise the currency.
CBN Dollar Sales and Rising Reserves Offer Some Cushion
A separate report by AIICO Capital Limited highlighted that the CBN intervened strategically in the FX market last week through targeted dollar sales.
“These interventions helped maintain relative stability. The Naira closed at ₦1,532.34/$, down just 13.6 basis points week-on-week,” AIICO Capital noted.
Additionally, Nigeria’s foreign reserves rose by $422 million to $37.85 billion as of Thursday, up from $37.43 billion the previous week.
All Eyes on MPC Meeting
As the Monetary Policy Committee (MPC) meets this week, analysts remain divided over the outlook for interest rates.
While some experts favour a modest rate cut, citing easing inflation and improving FX conditions, others caution that premature easing could reverse the gains from recent FX reforms.
“Cutting rates too soon could undermine FX stability and fuel renewed inflation, especially with lingering food supply shocks and global economic uncertainties,” PUNCH quoted an analyst as warning.
Comercio Partners noted that traders are adopting a wait-and-see approach ahead of the MPC’s communique.
“The real direction will come from the tone of the MPC statement,” the firm stated.
With stronger oil earnings, improved dollar inflows, and continued CBN intervention, analysts predict the Naira may remain within its current range in the near term—pending the MPC’s decision and global market developments.
