Naira fell 0.55% in July despite CBN's $430m intervention, Meristem says

The naira depreciated by 0.55% month-on-month to an average of N1,374.61/$ in the official market in July, even after the Central Bank of Nigeria pumped almost $430m into the foreign exchange market. Meristem Research's July 2026 Macro and Market Insight attributes the slide to stronger demand from importers, manufacturers and foreign investors outpacing available dollar supply.

The official rate in June averaged N1,366.99/$. The parallel market naira also weakened, falling 1.25% to average N1,409.73/$ during the month, according to Meristem.

Meristem sees near-term stability despite demand pressure

Meristem expects the naira to remain broadly stable in the near term, supported by CBN interventions, oil receipts and improved foreign portfolio inflows. The report also notes that the CBN's newly introduced FX BDC Purchase Tracker could improve transparency in the retail foreign exchange market by allowing real-time monitoring of sales to Bureau de Change operators.

"Together, these measures should support a more orderly FX market over time," the research firm said. It warned, however, that "lingering demand pressures from importers, manufacturers and foreign investors" could continue to weigh on the naira, particularly if global oil prices and financial conditions become less favourable.

Economists say fundamentals are solid

Prof Adi Bongo of the Lagos Business School said the movement in the naira should not cause worry. "Don't need to worry about the movement in the Naira because the fundamentals are quite solid. So, we have to look at our external balances to make projections regarding where we see the naira falling by year-end."

He noted that over the past 18 months, the naira has stabilised around a very narrow band, and the black-market premium has almost been eliminated. "That convergence is thanks to the strict regulatory oversight of the central bank. Judging from the fundamentals, then there is no reason for any sort of anxiety regarding the naira."

Bongo said minor fluctuations were linked to trading cycles. The major risk, he added, would come from geopolitical tensions, specifically the U.S.-Iranian conflict, threats to Hormuz, and oil prices. "If that happens to really distort the price of the commodity significantly, then that is something that may worry us."

Ayokunle Olubunmi, Head of Financial Institutions Ratings at Agusto & Co., said periodic CBN intervention was acceptable. "They will just periodically be entering the market, which is something that they will actually be doing. We expect that we're going to have some either appreciation or devaluation; however, it will be within a particular threshold." He described one per cent depreciation as acceptable, noting that demand pressure usually builds between July and October due to vacations, school fees and medical tourism.

Reserves rise, FX turnover shifts

The CBN's external reserves have climbed to about $52.2bn, the highest level in 17 years. Recent FMDQ data shows spot transactions fell 46.98% to $1.96bn in the week ended August 14, while FX forwards jumped 263.56% to $90.89m. Total weekly FX turnover dropped to $2.055bn from $3.729bn the previous week, suggesting traders are hedging rather than rushing for immediate dollars.

The naira closed the weekend at N1,358.25/$, supported by rising reserves and steady interbank activity. Meristem also reported that headline inflation eased marginally to 15.91% year-on-year in June from 15.93% in May, while core inflation fell sharply to 15.92% from 16.82%.

For Nigerian businesses and consumers, the CBN's firepower and improving oil receipts should keep the naira within a narrow band in the short term. But the report warns that food inflation, foreign exchange demand, high borrowing costs and geopolitical risks remain threats to a fragile recovery.