Naira weakens in official, parallel markets as reserves pause

The naira weakened against the dollar in both the official and parallel foreign exchange markets on Monday as trading activity slowed and external reserves paused their recent growth. CBN data showed the dollar quoted at N1,349.34 at the Nigerian Foreign Exchange Market, compared with N1,346.79 on Friday, a depreciation of N2.55.

In the parallel market, the local currency fell by N7 to N1,415 per dollar from N1,408 at the end of last week. The gap between the official and parallel market rates widened to N66, or 4.89 percent, from N61, or 4.53 percent on Friday.

Turnover and deals fall

Market activity moderated. Total FX turnover declined by 9.70 percent to $210.38 million on Monday from $232.98 million on Friday. The number of deals fell by 21.09 percent to 116 from 147 transactions.

NFEM data on turnover and deals for Monday were unavailable at the time of reporting. Activity had strengthened on Friday, with total turnover rising by 24.84 percent to $475.12 million from $380.57 million on Thursday. The number of deals increased by 25.2 percent to 313 from 250.

Reserves dip from peak

Nigeria’s external reserves declined by 0.36 percent to $55.06 billion as of November 6, 2026. The reserves remain well above last year’s level. On a year-on-year basis, they rose by 27.10 percent from $43.32 billion in the corresponding period of 2025, CBN data showed.

Analysts at the Financial Markets Dealers Association said the naira recorded divergent movements across the two segments, with the official market strengthening while the parallel market weakened. The NFEM rate appreciated by 0.34 percent to N1,347.64 per dollar, while the parallel market rate depreciated by 1.38 percent to N1,410.60. The premium widened to N62.96 from about N39 the previous week, reversing the narrowing trend in October.

The FMDA also noted that external reserves declined marginally by 0.16 percent week-on-week to $55.133 billion last week. It marked a slight pause after the reserves rose above the $55 billion threshold to their highest level since December 2008.

Import cover still strong

CBN data showed gross external reserves increased by $1.1 billion to $54.9 billion at the end of September 2026. The improvement reflected strong foreign portfolio inflows, elevated crude oil prices, resilient remittance inflows and continued access to multilateral and commercial external financing.

At that level, gross reserves provided an estimated 15.7 months of merchandise import cover and 10.7 months of total import cover, including services, based on balance of payments data for the 12 months to March 2026. Measured against net external reserves, the cover was lower. Based on the net reserves figure of $46 billion recently affirmed by Olayemi Cardoso, CBN governor, import cover stood at 13.2 months for merchandise imports and 8.9 months for total imports, including services.

The reserve build-up had coincided with relative stability in the FX market, supporting liquidity and helping to anchor expectations around the naira. The latest decline suggests a pause in accumulation, even as reserves remain substantially above last year’s level.