Naira holds near flat in black market as FX turnover climbs to $1.06bn

The naira traded at N1,400 in the parallel market on Friday, down N3 from N1,397 at Thursday's close, even as foreign exchange turnover at the official NFEM window jumped to $1.06 billion. The gap between the official and parallel market rates widened to 4.63 percent on Friday, from 4.41 percent on Thursday.

Official rate and reserves

In the official market, the naira had risen to a five-month high of N1,338.59 on Thursday, appreciating by N5 from N1,343.59 quoted on Wednesday at the Nigerian Foreign Exchange Market (NFEM).

Nigeria's external reserves, which give the CBN firepower to defend the naira, rose to an 18-year high of $53.31 billion as of August 27, 2026. That is a 29.27 percent increase from $41.24 billion recorded in the same period of 2025.

CBN data also showed total turnover at the NFEM window rose by 16.43 percent to $1.06 billion on Thursday, up from $913.76 million on Wednesday. The number of deals, however, dropped by 11.27 percent to 425 from 479.

Sectoral FX utilisation

According to the CBN's Quarterly Statistical Bulletin, foreign exchange utilisation across sectors rose sharply by 74 percent year-on-year to $16.2 billion in Q1 2026. Analysts at Quest Merchant Bank Limited said the increase was broad-based but mainly driven by invisible transactions, which more than doubled to $11.4 billion from $4.5 billion.

Invisible imports accounted for about 70 percent of total FX utilisation. Within that segment, the financial services sector was the largest user, with FX utilisation rising 117 percent year-on-year to $9.0 billion, about 79 percent of all invisible transactions. Business services, the second-largest category, saw utilisation jump to $1.2 billion from $223.6 million.

For visible imports, merchandise goods utilisation stayed broadly stable, rising 0.2 percent to $4.9 billion. Industrial firms, which depend heavily on imported raw materials and machinery, saw utilisation decline 20 percent to $1.8 billion. But imports of manufactured and transport products rose sharply to $1.1 billion and $295.0 million respectively, from $477.9 million and $142.8 million. The increase partly reflects higher import costs from global supply chain disruptions and elevated prices of critical inputs following the US-Iran conflict.

What it means for the naira

The rise in sectoral FX utilisation reflects improved liquidity in the economy, supported by stronger external reserves. Sustained FX availability has helped keep the naira relatively stable, boosting market confidence and encouraging demand from end-users through better predictability in the FX market.

Looking ahead, analysts at Quest Merchant Bank said: "We expect stronger FX utilisation across sectors, supported by the CBN's ongoing reforms and policy measures aimed at sustaining FX supply, deepening market liquidity and preserving confidence in the naira."