SAT AUG 01 2026-theGBJournal| Nigeria’s foreign exchange market closed July on a softer footing, with the naira surrendering part of its recent gains as renewed corporate and importer demand outweighed available dollar supply, while the country’s external reserves recorded their first meaningful reversal after nearly three months of sustained accumulation.
The local currency weakened by 0.5% week-on-week to ₦1,369.09 per US dollar in the official market, underscoring the fragile balance between improved FX liquidity and persistent demand for foreign currency.
The latest move leaves the naira ending the month with a modest depreciation despite periods of relative stability during July, highlighting that underlying demand pressures continue to test the Central Bank of Nigeria’s (CBN) exchange-rate management.
Investor expectations also turned slightly more cautious in the derivatives market.
The naira depreciated across most forward contracts, with the one-month forward weakening 0.2% to ₦1,392.17/$, the three-month contract falling 0.5% to ₦1,430.46/$, and the six-month tenor easing 0.1% to ₦1,484.50/$.
The one-year forward remained unchanged at ₦1,592.05/$, suggesting longer-term currency expectations were largely stable despite the near-term weakness.
The currency’s softer finish coincided with a reversal in Nigeria’s external reserve position.
Gross external reserves declined by $107.73 million, or about 0.21%, to $51.92 billion as of July 30, ending an almost three-month streak of uninterrupted growth that had been supported by improved oil receipts, foreign exchange inflows and tighter liquidity management.
The decline marks the first weekly contraction in reserves in roughly three months, signalling a pause in what had been one of the strongest reserve-building periods in recent years.
Although the pullback is relatively modest, it reflects the continuing trade-off between defending exchange-rate stability and meeting foreign currency demand in the domestic market.
Even so, with reserves remaining comfortably above the $51 billion threshold, analysts say the Central Bank retains a significant buffer to smooth excessive currency volatility.
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