Naira Appreciates to N1,378/$ at Official Market as Dollar Demand Drops

The Nigerian naira posted a modest gain against the US dollar at the official foreign exchange market on Thursday, closing at N1,378.4313/$. This improvement came as reduced demand for foreign currency and weaker trading activity helped support the local currency.

Fresh data from the Central Bank of Nigeria (CBN) showed the naira strengthened slightly from N1,379.0675/$ recorded a day earlier at the Nigerian Foreign Exchange Market (NFEM). The appreciation reflects improving liquidity conditions despite the absence of fresh dollar interventions by the apex bank.

Lower Trading Volume Drives Gain

Market data indicated that the naira's latest gain was largely driven by a slowdown in foreign exchange demand among banks and corporate customers. Interbank FX turnover fell sharply to $78.71 million, a decline of more than 62% from the $208.09 million traded on Wednesday.

Trading activity also weakened considerably. The number of completed transactions at the NFEM dropped to 106 deals, down from 150 deals recorded in the previous session. Analysts said the lower trading volume suggests that pressure from dollar buyers eased, allowing the naira to recover modestly and maintain stability around the N1,378/$ level.

The market also recorded fewer customer bids as financial institutions executed fewer foreign exchange transactions during the trading session, according to a report by MarketForces Africa.

Parallel Market Weakens Amid Dollar Demand

While the official market recorded gains, the naira weakened slightly in the parallel market. The local currency depreciated to N1,400 per US dollar as demand for foreign currency increased among importers, travellers and other end-users in the informal market, where dollar supply remained relatively tight.

The widening gap between the official and parallel market rates continues to reflect differences in liquidity and access to foreign exchange across both segments.

Global Dollar Stays Resilient

Globally, the US dollar remained resilient against major currencies as investors sought safe-haven assets amid renewed geopolitical tensions in the Gulf region. Higher crude oil prices also reinforced expectations that global interest rates could remain elevated for longer, supporting the greenback.

The dollar traded around 162.41 Japanese yen, close to its strongest level since early July, while the euro remained largely unchanged at $1.1426. The British pound also traded flat at $1.3392. Elsewhere, the New Zealand dollar extended gains after the country's central bank maintained a hawkish monetary policy stance.

Precious metals remained supported by global uncertainty. Gold rebounded after briefly slipping below $4,022 and traded with a firmer tone near $4,118, while silver recovered toward the $59 level, reflecting continued investor demand for safe-haven assets.

What This Means for the Naira

The naira's stability at the official market suggests that CBN policies and improved liquidity are gradually supporting the currency. However, the gap between official and parallel rates shows that demand pressures remain in the informal market. With global oil prices showing resilience and geopolitical tensions ongoing, Nigeria's foreign exchange outlook will depend on sustained dollar supply and reduced import demand.