Naira Hits Strongest Level Since December 2024, Gains 0.72% on FX Inflows

The naira continued its upward momentum last week, appreciating by 0.72 per cent (₦10.5) to close at ₦1,455.17 per dollar at the official market, its strongest level since December 2024, according to data from the Central Bank of Nigeria (CBN).

Analysts attributed the domestic currency’s performance to sustained foreign exchange inflows from portfolio investors and remittances. At the parallel market, the naira also firmed up by 0.88 per cent to ₦1,475 per dollar, supported by improved market liquidity.

The week’s trading began on a bearish note as early demand pressures linked to the exit of some foreign portfolio investors temporarily weakened the currency. However, sentiment shifted midweek as stronger foreign inflows — particularly from FPIs converting dollars to naira for local fixed-income investments — bolstered market confidence.

In its weekly outlook, AIICO Capital projected near-term stability for the naira, citing “improved US dollar supply and rising external reserves” as key supports. Similarly, Cowry Asset Management Limited noted that enhanced FX inflows eased demand-side pressure. The firm maintained a positive short-term outlook, though it cautioned that rising import demand or weaker inflows could moderate gains.

“Oil prices may remain under pressure due to increased supply, but any rebound in global demand could strengthen Nigeria’s external earnings and help sustain FX market stability” Cowry Asset stated.

Nigeria’s external reserves rose to $42.57 billion, boosted by higher receipts from oil exports, remittances, and portfolio investments. Analysts say this growth enhances the CBN’s ability to manage short-term market pressures and sustain currency stability.

Adding to the upbeat sentiment, global index provider FTSE Russell in its September 2025 semi-annual review placed Nigeria on its Watch List for potential reclassification from Unclassified to Frontier Market status. The move follows improvements in FX liquidity and investor confidence after years of repatriation delays.

FTSE Russell explained that the upgrade consideration comes as Nigeria now meets the five FTSE Quality of Markets criteria, with a possible full reclassification expected in March 2026. Nigeria was downgraded in 2023 after severe FX bottlenecks hindered investor operations.

Meristem Securities analysts noted that the Watch List inclusion “repositions Nigeria on the global investment radar” adding that both active and passive funds are likely to start positioning for renewed exposure to Nigerian assets.

“This development could trigger significant foreign portfolio inflows over the next year, directly supporting the naira by increasing dollar supply and enhancing FX liquidity” the firm said.

Analysts, however, emphasised that sustaining the naira’s momentum will depend on the government’s commitment to maintaining a transparent, market-driven foreign exchange regime throughout the observation period.