Naira Dips Slightly Against Dollar as Official Market Activity Slumps

The naira depreciated marginally by N1.50 against the dollar on Wednesday, closing at N1,362.05 at the Nigerian Foreign Exchange Market (NFEM) window. This compares with N1,360.55 recorded on Tuesday, according to data from the Central Bank of Nigeria (CBN).

The slight decline came amid reduced activity in the official market. Total turnover at the NFEM window fell by 46.88 percent to $75.37 million on Wednesday, down from $141.89 million the previous day. This reflects softer demand and supply conditions.

Despite the drop in turnover, the number of deals at the NFEM window rose by 20.83 percent to 336 transactions, up from 266 on Monday.

In the interbank segment, market activity also weakened. The number of deals fell by 25.34 percent to 109 from 146 a day earlier. However, interbank turnover surged to $857.67 million, an 829.72 percent increase from $92.25 million on Monday.

In the parallel market, the naira remained unchanged at N1,400 per dollar. This left the gap between the official and parallel market rates at about N38 per dollar.

External Reserves Hit 17 Year High

Nigeria’s external reserves continued their upward trajectory. Gross reserves climbed to a 17-year high of $50.35 billion as of June 9, 2026. This represents an increase of $12.30 billion or 32.33 percent from $38.05 billion recorded on the same date in 2025.

The reserves provide the CBN with ammunition to support the currency and meet external obligations.

IMF Backs Nigeria’s Exchange Rate Reforms

The stability in the foreign exchange market came as the International Monetary Fund (IMF) threw its weight behind Nigeria’s exchange rate reforms. The Fund described the flexible exchange rate regime as a key pillar of the country’s recent macroeconomic stabilisation efforts.

In its latest Article IV Consultation on Nigeria, the IMF commended the reforms implemented over the past three years. These include the liberalisation of the foreign exchange market, which the Fund said had strengthened economic resilience and improved overall macroeconomic stability.

The endorsement comes nearly three years after the CBN embarked on sweeping reforms aimed at unifying multiple exchange rates, improving price discovery and attracting foreign capital into the economy.

“Directors welcomed the authorities’ commitment to the flexible exchange rate regime, recognizing that foreign exchange interventions can play a complementary role under certain circumstances,” the IMF said.

While expressing support for the reforms, the Fund stressed that the process remains incomplete. It urged policymakers to continue removing distortions that limit the efficient functioning of the market.

“Directors called for reducing reliance on portfolio flows with roll-over risk, phasing out remaining exchange restrictions, capital flow management measures, and remaining multiple currency practices as conditions permit,” the IMF said.

Reforms Narrow Gap, Boost Liquidity

Nigeria’s foreign exchange market has undergone a significant transformation since the adoption of market-driven reforms. The measures have helped narrow the gap between official and parallel market rates, improve liquidity and restore investor confidence after years of distortions and chronic dollar shortages.

According to the IMF, the reforms have contributed significantly to the strengthening of Nigeria’s external position. Gross international reserves rose to $46 billion in 2025 from $40 billion at the end of 2024. This was supported by a strong current account surplus, foreign portfolio investments in CBN Open Market Operations (OMO) bills and proceeds from a Eurobond issuance.

Net international reserves recorded an even stronger improvement, increasing to $35 billion at the end of 2025 from $23 billion a year earlier. The country’s reserve position has continued to strengthen in 2026, recently crossing the $50 billion threshold for the first time in 17 years.

IMF Urges Tight Monetary Policy

The IMF underscored the importance of maintaining disciplined macroeconomic policies to preserve the gains already achieved. Although inflation has moderated significantly over the past year, the Fund warned that rising global fuel and food prices could create renewed pressure on domestic prices and complicate the disinflation process.

Consequently, IMF Executive Directors agreed that the CBN should maintain a tight monetary policy stance. They urged the central bank to continue adopting a data-dependent approach until disinflation becomes firmly entrenched and inflation expectations are fully anchored.

The Fund also welcomed progress toward the adoption of an inflation-targeting framework. It encouraged authorities to further strengthen monetary policy transmission and communication.

Poverty and Food Insecurity Persist

Despite the improvement in key macroeconomic indicators, the IMF cautioned that many Nigerians continue to face difficult economic conditions. According to the Fund, poverty affects about 63 percent of the population based on the national poverty line. An estimated 27 million Nigerians experienced food insecurity during the latter part of 2025.

Growth Outlook and Risks

Nigeria’s economy grew by an estimated 4 percent in 2025. It is projected to expand slightly to 4.1 percent in 2026, supported by ongoing reforms and stronger macroeconomic fundamentals.

However, the IMF warned that risks to the outlook remain elevated. These risks include uncertainties surrounding global fuel and food prices, as well as domestic security challenges.

The Fund said sustained implementation of reforms, backed by prudent fiscal and monetary policies, would be critical to preserving exchange rate stability, maintaining investor confidence and supporting long-term economic growth.