Naira Gains Against Dollar in Official Window as Liquidity Improves

The Nigerian naira recorded a modest gain against the United States dollar in the official foreign exchange market on Wednesday, closing at N1,382.1841 per dollar. This improvement from N1,383.0755 in the previous session was driven by improved dollar liquidity and weaker corporate demand.

Official Market Performance

Fresh data from the Central Bank of Nigeria (CBN) showed the naira strengthened slightly in the Nigerian Foreign Exchange Market (NFEM). Transactions were completed within a range of N1,379.50 to N1,384.50 per dollar, pointing to healthier liquidity conditions compared to previous sessions.

Analysts attributed the naira's recovery to an increase in dollar supply and reduced pressure from corporate demand. The improved liquidity environment helped offset weaker market activity and supported the naira throughout the trading day.

Forex Turnover Drops 50%

Despite the stronger exchange rate, overall trading activity declined sharply. According to official CBN figures, total interbank foreign exchange turnover fell to $121.73 million, representing a 50% drop from the $243.10 million recorded on Tuesday.

Trading activity among banks and market makers also slowed considerably. The number of completed interbank deals fell to 115 transactions, down from 140 in the previous session. The decline in turnover suggests fewer market participants were actively trading, even as dollar availability improved.

Mixed Performance Across Currencies

The naira also posted a slight gain against the dollar in the parallel market, supported by increased foreign currency supply. However, the local currency weakened against the British pound and the euro as demand for those currencies remained stronger.

Currency dealers said demand for travel, school fees and international business payments continued to support the pound and euro, keeping them elevated despite the naira's improved performance against the dollar, according to a report by MarketForces Africa.

Outlook and Oil Prices

Market observers expect the naira to remain relatively stable in the near term, provided foreign exchange inflows continue to improve. Stronger liquidity in the official market could help contain volatility, although sustained demand for foreign currencies may continue to exert pressure on the pound and euro.

The CBN's ongoing reforms aimed at improving transparency and boosting FX supply are also expected to support market confidence in the coming weeks.

Meanwhile, global oil prices ended Wednesday with marginal gains. U.S. West Texas Intermediate (WTI) crude for August delivery rose 26 cents to settle at $79.60 per barrel, while Brent crude for September delivery gained 22 cents to close at $84.95 per barrel.

Oil prices remained supported after the United States launched another round of military strikes targeting Iranian military assets near the Strait of Hormuz and resumed a naval blockade around key Iranian ports.

For the naira and Nigerian businesses, the modest gain in the official window signals that improved dollar supply can support stability. However, the sharp drop in turnover suggests that genuine market activity remains shallow, and sustained inflows will be needed to maintain the naira's current level.