The naira on Tuesday extended its gains in the official foreign exchange (FX) market despite a sharp decline in weekly FX inflows.
Data published by the Central Bank of Nigeria (CBN) showed that the naira appreciated by 0.5 percent as the dollar was quoted at N1,449.98 on Tuesday, compared with N1,456.56 quoted on Monday at the Nigeria Foreign Exchange Market (NFEM).
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In the parallel market, commonly referred to as the black market, the naira traded flat at N1,482 on Tuesday, unchanged from Monday, but weaker than the N1,480 recorded at the end of last week.
Foreign exchange inflows into the NFEM window contracted significantly by 49.3 percent to US$741.0 million from US$1.46 billion recorded in the prior week, according to a report by the research department of Coronation Merchant Bank.
The CBN remained the dominant source of FX liquidity during the week, accounting for 27.73 percent of total inflows. Exporters contributed 24.52 percent, while foreign portfolio investors accounted for 24.23 percent. Non-bank corporates contributed 13.78 percent, individuals accounted for 7.37 percent, and other sources made up the remaining 2.37 percent.
The report noted that in the previous week, the naira had weakened against the US dollar across market segments. At the official NFEM window, the currency depreciated by 0.69 percent, or N10.09, to close at N1,464.50 per dollar. Similarly, the naira traded weaker in the parallel market, declining by 0.33 percent week-on-week to close at N1,495.00 per dollar. The depreciation was attributed largely to a slowdown in foreign exchange receipts from foreign portfolio investors, combined with elevated demand pressures.
Meanwhile, the CBN’s gross external reserves declined marginally by 0.58 percent week-on-week, equivalent to $263.15 million, to close at $45.21 billion as of December 19, 2025. The marginal decline reflected continued intervention by the apex bank in the FX market to manage excess volatility. However, the reserves rebounded slightly to $45.23 billion as of December 22, 2025.
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Looking ahead, analysts at SBM Intelligence project that the naira will trade within a relatively narrow band of N1,470 to N1,520 per dollar in 2026.
Muda Yusuf, director and chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), said exchange rate projections remain conditional on several domestic and external factors. “If the current reform trajectory is sustained, oil production remains strong and the importation of petroleum products continues to decline, these will support the naira,” he said, cautioning that external shocks, such as a sharp drop in oil prices, could weaken the currency. “If current parameters remain broadly unchanged and reserves stay at present levels, the naira could continue to gain some strength and trade within the N1,400 to N1,500 range, all other things being equal.”