Naira Seen Gaining Ground As Forex Liquidity Improves – Analysts

The value of the naira is expected to remain stable hovering within the N1,500 to the dollar benchmark buoyed by improving foreign exchange liquidity, rising investor confidence, and targeted Central Bank interventions, according to analysts and market observers.

Having closed last week at N1,528.56 to the dollar at the official end of the market and N1,530 at the parallel market, industry watchers and analysts say they expect the naira to gain marginally this week on improved liquidity.

According to the head of Financial Institutions Ratings at Agusto & Co., Ayokunle Olubunmi, current indicators suggest the naira could record further gains this week, as he cited increased market liquidity and foreign inflows.

“Everything seems to be working in favour of the naira—at least for this week. Liquidity for the naira is improving, and we’re seeing a gradual return of foreign investors on the Nigerian Exchange. This has helped the Central Bank of Nigeria (CBN) strengthen its buffer and manage market delays more effectively”, he said.

Noting that an appreciation of between N10 to N5, though slight, would be notable especially when compared to the heavy depreciation witnessed two years ago, he said looking at the market, “things are improving. Just a day or two ago, we saw an uptick.

“Liquidity for the naira is actually improving, and it looks like foreign investors are trickling in gradually. This increase in liquidity is helping the Central Bank boost its buffer. That ultimately strengthens the CBN’s ability to stabilize the market and manage delays in liquidity.”

Ayokunle noted that in the short term, there is no outlook for any significant depreciation, saying “in fact, we might even see a slight appreciation of the naira this week. However, he cautioned that seasonal pressures, particularly end-of-month demand for school fees and summer travel, could temporarily put a strain the naira.

On a similar note, analysts at Cowry Asset Management also expect the local currency to retain its recent momentum, citing a softer U.S. dollar and rising global oil prices as key external supports. “The recent strength in the naira reflects a combination of rising forex inflows, CBN reforms, and targeted interventions aimed at improving dollar supply,” Cowry said in a market note.

Last week the naira appreciated by 0.65 per cent week-on-week to N1,528.56 in the official market, while the parallel market rate strengthened by 2.29 per cent to close at N1,530 to the greenback. The improvement comes despite global oil price volatility, as Brent crude slipped to $68.58 per barrel amid shifting OPEC+ signals and geopolitical developments in the Middle East.

According to Cordros Research, the naira is likely to remain relatively stable in the near term, thanks to improved FX supply from both domestic and foreign sources. “Nonetheless, we highlight the possibility of gradual depreciation should global pressures reemerge,” the firm stated in its mid-year outlook.

Meanwhile, gross external reserves declined for the seventh straight week, falling by $138.3 million to $37.18 billion as of July 2, 2025. In the forwards market, the naira appreciated across all tenors, with the 1-month, 3-month, 6-month, and 1-year contracts gaining between 1.1 and 4.0 per cents.