…Forward market also points to stronger naira
…The positive sentiment extended into the forward market, where the naira appreciated by 0.8% across all major tenors.
SAT AUG 22 2026-theGBJournal| The naira strengthened against the US dollar over the past week, supported by robust foreign-exchange supply and improved market liquidity, while rising external reserves provided further evidence of stronger FX buffers.
The currency appreciated 0.8% week-on-week to N1,346.99/$, extending its recent period of relative stability as increased dollar supply helped ease pressure in the official market.
The naira’s performance was broadly firm across the week, although trading remained sensitive to shifts in supply and demand. The week-on-week appreciation suggests that improved FX availability continues to provide a stronger anchor for the currency, with market participants increasingly responding to actual supply conditions rather than speculative demand.
Forward market also points to stronger naira
The positive sentiment extended into the forward market, where the naira appreciated by 0.8% across all major tenors.
The one-month forward rate strengthened to N1,369.71/$, while the three-month contract rose to N1,406.77/$. The six-month forward improved to N1,460.09/$, while the one-year contract appreciated to N1,566.57/$.
The relatively uniform movement across the forward curve suggests that market expectations for the naira have improved, with investors pricing in a more stable FX environment over the medium term.
Nevertheless, the premium embedded in longer-dated contracts indicates that participants continue to allow for gradual currency weakness over time.
External reserves strengthen
Nigeria’s external buffers also improved during the week. Gross external reserves rose by $335.20 million to $52.66 billion as of August 19, providing additional support for the Central Bank of Nigeria’s capacity to manage FX liquidity and absorb periods of heightened demand.
The increase in reserves, alongside stronger FX supply, should help reinforce investor confidence and reduce near-term concerns over the sustainability of the naira’s recent stability.
Outlook: stability likely, but oil inflows remain key risk
We expect the naira to trade within a broadly stable range around current levels in the near term, supported by resilient portfolio inflows, firmer investor sentiment and an improving current-account position.
The combination of stronger external reserves and increased FX supply provides a more favourable backdrop for the currency than seen during periods of acute dollar shortages. Continued portfolio inflows should also help support market liquidity, particularly if domestic yields remain attractive to foreign investors.
However, oil-related FX inflows remain the principal downside risk. A renewed decline in crude oil receipts or weaker production could reduce dollar supply and place renewed pressure on the naira. Similarly, a reversal in portfolio flows or a deterioration in global risk sentiment could challenge the current stability.
For now, the balance of risks appears tilted towards continued naira stability, with movements in oil receipts, portfolio flows, external reserves and CBN FX-market interventions likely to determine the direction of the currency through the coming weeks.
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