Naira closes May strong, gap with black market narrows as reserves hit $49.26bn

Nigeria’s naira ended May 2026 on a strong note, with the gap between the official and parallel exchange rates narrowing sharply. This signals growing stability in the country’s currency market.

At the official foreign exchange window, the naira appreciated by 0.16 per cent during the week to close at N1,373.25 per dollar. In the parallel market, the currency weakened slightly to around N1,372 per dollar, leaving both segments nearly aligned.

The development is a key milestone for the Central Bank of Nigeria’s efforts to unify exchange rates and boost confidence in the forex market.

Nigeria’s external reserves rose by 0.57 per cent to $49.26 billion, providing a buffer against volatility. Analysts said the increase has strengthened market confidence and helped reduce speculative pressure.

Last week’s trading showed that the convergence of official and parallel rates is becoming more entrenched. This reduces opportunities for arbitrage and speculation.

Despite the naira’s gains, global oil market trends pose risks. Brent crude, Nigeria’s benchmark, fell from $93.84 per barrel to $92.08. West Texas Intermediate dropped to $87.55 per barrel. Analysts attributed the decline to profit-taking following April’s rally.

While stronger reserves support the naira in the near term, experts warn that sustained oil price declines could hurt Nigeria’s foreign exchange earnings over time.

Liquidity surge boosts money market

Nigeria’s money market remained flush with cash throughout the week. System liquidity climbed from N3.84 trillion to N6.02 trillion by Friday. This was driven by a N1.97 trillion maturity of Open Market Operations instruments and increased placements at the Central Bank’s Standing Deposit Facility.

Despite the surge, interbank lending rates stayed stable, reflecting comfortable funding conditions.

Investor appetite remained strong in the fixed-income market. At the Central Bank’s May 29 OMO auction, the 102-day instrument attracted subscriptions worth N1.73 trillion against an offer size of N200 billion. This highlights robust demand for short-term government securities, according to a Guardian report.

Analysts expect liquidity conditions to stay strong in June, supported by anticipated inflows of about N3.35 trillion from maturing OMO and Treasury Bill instruments.

While forex demand and dollar liquidity constraints may create occasional pressure, the near convergence of official and parallel rates, combined with rising reserves, offers a positive signal for the naira as the new month begins.