SAT OCT 17 2026-theGBJournal| The naira depreciated by 0.1% week-on-week (w/w) to N1,333.09/USD, as renewed domestic demand for foreign currency outweighed the impact of the Central Bank of Nigeria’s (CBN) USD430.60 million intervention.
The marginal decline highlights the persistent demand-side pressures in the domestic foreign exchange (FX) market, suggesting that increased dollar supply from the apex bank has yet to fully offset prevailing liquidity requirements.
Despite the spot-market weakness, the naira recorded gains across the forward curve, pointing to a more constructive outlook for the currency over the medium term.
In the forwards market, the naira appreciated across the 1-month contract (+1bp to N1,352.89/USD), 3-month contract (+8bps to N1,370.80/USD), 6-month contract (+22bps to N1,436.75/USD), and 1-year contract (+65bps to N1,531.01/USD).
The broad-based improvement in forward pricing suggests a shift in market expectations, although sustained spot-market stability will depend on the consistency of FX supply, domestic demand conditions, and the effectiveness of ongoing CBN interventions.
In the parallel market, Bureau De Change (BDC) operators quoted the dollar at a buying rate of N1,375 and a selling rate of N1,390.
The buying rate represents the amount dealers pay Nigerians selling US dollars, while the selling rate reflects the amount customers pay to purchase one US dollar.
Rates may vary slightly depending on location, transaction size, and individual dealers.
The difference between the parallel-market selling rate and the official spot rate underscores the continued segmentation of the FX market, with access to foreign currency remaining a key determinant of pricing across market segments.
Meanwhile, the euro traded at N1,590 on the parallel market in Nigeria, reflecting continued demand for foreign currency outside the official market.
EUR/NGN technical indicators point to short- and medium-term bullish momentum, although overbought conditions suggest that the pace of appreciation may encounter resistance.
Technical projections indicate a potential trading range of ₦1,492–₦1,507 over the next two days. However, the outlook remains sensitive to shifts in demand, liquidity conditions, and broader currency-market sentiment.
On the macroeconomic front, Nigeria recorded USD18.34 billion in FX utilisation in Q2 2026, the highest quarterly figure since 2011, with services and financial payments emerging as major drivers.
The elevated utilisation underscores the scale of Nigeria’s external payment obligations and the structural demand for foreign currency from businesses, financial institutions, and other economic agents.
While the figures reflect substantial FX flows through the economy, the composition of utilisation remains important in assessing the pressure these payments could exert on domestic dollar liquidity.
Providing a counterweight to the demand pressures, Nigeria’s gross external reserves increased by USD27.75 million to USD55.09 billion as of 15 October 2026.
The increase strengthens the country’s external liquidity buffer and could support confidence in the CBN’s capacity to meet legitimate FX demand and manage periods of heightened market pressure.
Nevertheless, the sustainability of reserve accumulation will depend on the balance between FX inflows and outflows, alongside the trajectory of domestic demand.
MARKET OUTLOOK: The naira’s near-term direction remains a contest between persistent dollar demand and the support provided by CBN interventions and rising external reserves.
While gains across the forward curve offer a more positive signal for medium-term expectations, the marginal depreciation in the spot market indicates that underlying pressures have not fully dissipated.
Sustained currency stability will require more consistent FX inflows, improved market liquidity, and a narrowing of pricing disparities between official and parallel-market segments.
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