Naira flat as external reserves shed $120m in five days

The naira traded almost unchanged against the dollar in the official foreign exchange market on Thursday, even as Nigeria's external reserves cooled and market liquidity moderated. The Central Bank of Nigeria (CBN) put the dollar at N1,366.73 on Thursday, against N1,366.71 on Wednesday at the Nigerian Foreign Exchange Market (NFEM).

Parallel market premium widens

At the parallel market, the naira weakened by N5, with the dollar quoted at N1,415 on Friday versus N1,410 on Wednesday. The premium between the official and parallel market rates widened to 3.6 percent from 3.3 percent previously.

Activity in the interbank FX market also softened. Total turnover fell by 4.28 percent to $58.42 million on Thursday from $61.03 million on Wednesday. The number of deals dropped by 17.4 percent to 71 transactions from 86 recorded a day earlier.

Thursday's NFEM turnover and deal figures were not available at the time of reporting, but trading had already slowed. Turnover fell by 37.97 percent to $363.13 million on Wednesday from $585.38 million on Tuesday. Deals declined by 16.18 percent to 259 from 309 over the same period.

Reserves ease from peak

Nigeria's external reserves, which give the CBN firepower to support the naira and meet external obligations, declined to $51.92 billion as of July 29, 2026, from a peak of $52.04 billion recorded on July 22. That is a drop of about $120 million in five days.

Still, reserves are much stronger than a year earlier. They stand $12.65 billion, or 32.2 percent, above the $39.27 billion recorded in the corresponding period of 2025, according to CBN data.

In its 2025 Annual Report and Statement of Accounts, the CBN said sustained reforms in the foreign exchange market continued to improve stability and strengthen price discovery. As a result, the naira appreciated to N1,435.76/$ at the end of 2025 from N1,535.82/$ at the end of 2024. On an annual average basis, the exchange rate stood at N1,518.38/$ in 2025, compared with N1,478.97/$ in 2024.

CBN reforms and diaspora push

The apex bank said it implemented several policy measures during the year to improve efficiency and transparency in the FX market, boost inflows, deepen price discovery and support exchange rate stability. It sustained the Willing Buyer-Willing Seller framework and required authorised dealers to quote and publicly display exchange rates at their currency exchange kiosks.

To strengthen governance, the CBN launched the Nigeria Foreign Exchange Code in January 2025. Built around six principles, ethics, governance, execution, information sharing, risk management, and confirmation and settlement, the code aligns Nigeria's FX market with global best practices.

The bank also introduced the Non-Resident Bank Verification Number (NRBVN) in May 2025, enabling Nigerians in the diaspora and other non-residents with financial interests in Nigeria to obtain a BVN without being physically present. In addition, the CBN launched the Non-Resident Nigerian Ordinary Account (NRNOA) and the Non-Resident Nigerian Investment Account (NRNIA) for Nigerians abroad. The NRNOA allows non-residents to remit foreign earnings and manage funds in both foreign and local currencies, while the NRNIA enables eligible account holders to invest in Nigerian assets using either foreign or local currency.

To improve FX liquidity, the CBN allowed existing Bureau de Change operators to purchase up to $25,000 weekly from authorised dealers. The temporary access to the NFEM, initially scheduled to end on January 31, 2025, was later extended until May 30, 2025.

For Nigerian businesses, the stable official rate offers some predictability, but cooling reserves and a wider parallel premium suggest the CBN may face more pressure defending the naira in the months ahead.