Naira weakens to N1,410/$ in black market as summer travel demand hits

The naira fell to N1,410 per dollar in the parallel market on Monday as renewed demand for foreign exchange outweighed positive sentiment from Nigeria's rising external reserves. The local currency depreciated by N13 week-on-week from N1,397 per dollar quoted on Monday last week, and lost N2 compared with N1,408 traded on Friday.

Black market pressure driven by summer travel

Currency traders attributed the renewed pressure on the naira in the parallel market to increased demand from end users sourcing foreign exchange ahead of the summer holiday season. “The demand for dollars has picked up slightly as people prepare for summer travel,” one trader told BusinessDay on Monday.

The weakness in the parallel market contrasts with the official foreign exchange market, where the naira rebounded last week after recovering from previous losses amid improving liquidity and stronger external reserves.

Official market gains ground

Data published by the Central Bank of Nigeria showed that the naira appreciated by N10.74 week-on-week at the Nigerian Foreign Exchange Market, with the dollar closing at N1,370.19 on Friday, compared with N1,380.93 a week earlier. That represents a 0.78 percent gain.

Nigeria's external reserves, which provide the CBN with buffers to support the naira and meet external obligations, continued their upward trajectory, rising to $51.45 billion as of June 30, 2026. This represents an increase of $14.24 billion, or 38.27 percent, from $37.21 billion recorded in the corresponding period of 2025, according to CBN data.

FX supply moderates despite reserve strength

Despite the stronger reserve position, a report by Quest Merchant Bank showed that foreign exchange supply to the market moderated in June. According to the report, total FX inflows declined by 26 percent month-on-month and 11 percent year-on-year to approximately $2.8 billion in June 2026, reversing the increase recorded in the previous month.

The decline reflected weaker inflows from both domestic and foreign sources, with domestic inflows accounting for most of the slowdown. Exporter proceeds recorded the sharpest decline within the domestic segment, falling by 39 percent month-on-month to $867.9 million in June from $1.4 billion in May. Quest Merchant Bank attributed the moderation partly to lower Bonny Light crude oil prices, which averaged $87.7 per barrel in June compared with $112.6 per barrel in the previous month, reducing export earnings.

Foreign exchange inflows from local corporates also weakened, declining to $420 million in June from $520 million in May, accounting for part of the overall moderation in domestic FX supply.

CBN intervention and offshore trends

Although FMDQ data suggested limited intervention by the CBN during the month, Quest Merchant Bank said its channel checks indicated that the apex bank remained active in the market, with estimated FX sales of about $270 million. The report noted that the CBN's interventions helped ease demand pressures and maintain relative stability in the naira despite weaker supply from key market participants.

Offshore participation also softened during the month, with foreign inflows declining by 13 percent month-on-month to about $1.5 billion as investors remained cautious amid persistent global uncertainties. Foreign portfolio investors, which remained the largest source of offshore FX inflows, reduced their participation by 16 percent month-on-month to approximately $1.4 billion. However, foreign direct investment and inflows from other foreign corporates posted stronger growth, rising by 22 percent and 223 percent month-on-month to $19.2 million and $62 million, respectively.

Looking ahead, Quest Merchant Bank expects foreign exchange supply conditions to remain resilient, supported by sustained offshore inflows driven by Nigeria's attractive carry trade environment and improving macroeconomic fundamentals.

For Nigerian consumers and businesses, the widening gap between the parallel and official rates signals continued pressure on the naira, with summer travel demand likely to keep the black market volatile in the weeks ahead.