NFEM hits $46.4bn turnover in four months as naira holds firm

Nigeria's foreign exchange market recorded $46.37 billion in turnover within four months of publishing trading data under the Nigeria Foreign Exchange Market (NFEM), as the naira remained largely stable across both the official and parallel markets despite intermittent liquidity pressures. Data published by the Central Bank of Nigeria (CBN) showed that combined turnover at the NFEM and interbank foreign exchange market reached $46.37 billion between March and June 2026.

Breakdown of trading activity

A breakdown of the figures showed that turnover at the NFEM window accounted for $38.61 billion during the period, while interbank transactions totalled $7.76 billion. Trading activity was equally robust, with the NFEM recording 22,282 deals over the four months, compared with 8,021 transactions executed in the interbank market. The increased market activity coincided with relative exchange rate stability.

At the official foreign exchange market, the naira closed at N1,379.68 per dollar on June 30, 2026, representing a marginal depreciation of N1.66 from N1,378.02 recorded on March 2, 2026. In the parallel market, the local currency weakened by N22 over the same period to close at N1,397 per dollar in June from N1,375 in March. Despite the slight depreciation, the spread between the official and parallel market exchange rates narrowed significantly, effectively eliminating the wide arbitrage opportunities that had characterised the market before the CBN's foreign exchange reforms.

Analysts point to liquidity pressures

Analysts at Quest Merchant Bank said the naira came under mild pressure in June as foreign exchange liquidity weakened. According to the bank, the naira closed June at N1,379 per dollar, representing a marginal depreciation of 0.3 percent month-on-month from N1,376 per dollar recorded in May. The analysts attributed the pressure primarily to weaker foreign exchange liquidity, noting that high-frequency FMDQ data showed total FX supply to the market declined by 26 percent month-on-month to $2.8 billion as inflows from both foreign and domestic market participants moderated.

“This outflow tightened dollar liquidity and exerted mild pressure on the naira during the month,” the analysts said. The impact was also reflected in the parallel market, where the naira depreciated by 1.1 percent month-on-month to N1,405 per dollar amid sustained foreign exchange demand and continued supply constraints outside the official market.

CBN intervenes to ease squeeze

To ease the liquidity squeeze, the CBN intervened by injecting $320 million into the foreign exchange market. According to Quest Merchant Bank, the intervention helped improve liquidity conditions and limited exchange rate volatility despite persistent demand pressures. “Consequently, the naira recorded a modest appreciation to N1,368.14 per dollar from N1,370.16 per dollar in the previous month on an average basis,” the analysts noted.

Looking ahead, they expect the naira to remain broadly stable and trade within a relatively narrow range, supported by sustained foreign exchange liquidity and robust external reserve buffers. “However, we anticipate persistent demand pressures to remain elevated, underpinned by Nigeria's structural demand for foreign exchange,” the analysts added.

Reforms and market outlook

The improved market turnover comes against the backdrop of reforms introduced by the CBN to strengthen governance, transparency and efficiency in Nigeria's foreign exchange market. In November 2024, the apex bank issued revised operational guidelines for the Nigeria Foreign Exchange Market as part of broader efforts to deepen the market following the consolidation of all official foreign exchange windows. A key provision of the revised framework requires the boards of banks, alongside their chief executive officers and chief compliance officers, to annually attest to the Nigeria FX Code of Ethics and Conduct, reaffirming their commitment to market integrity and compliance with all CBN regulations.

Under the framework, authorised dealers are responsible for facilitating foreign exchange transactions for businesses and individuals, conducting due diligence, providing transparent pricing and expanding market access through digital platforms. The guidelines also stipulate that all legitimate foreign exchange transactions must be conducted exclusively through authorised dealers, while dealings with unlicensed intermediaries remain prohibited.

For Nigerian businesses and consumers, the narrowing gap between official and parallel market rates signals improved market efficiency. Sustained stability could help businesses plan better on import costs, though structural demand for dollars means the naira remains vulnerable to any sharp drop in FX inflows.