SAT JULY 25 2026-theGBJournal| The naira recorded its strongest weekly appreciation in recent weeks, strengthening against the US dollar as renewed foreign portfolio investment (FPI) inflows outweighed domestic demand for foreign exchange, signalling sustained investor confidence in Nigeria’s financial markets.
The currency’s advance was reinforced by another increase in the country’s external reserves, which climbed for an eleventh consecutive week, providing additional support for exchange rate stability.
The currency appreciated by 1.6 per cent week-on-week to NGN1,362.32 per US dollar at the official market, reversing recent weakness as improved foreign currency inflows helped ease pressure on the domestic foreign exchange market.
The currency’s recovery was largely driven by stronger foreign portfolio investment inflows into Nigerian fixed-income assets, reflecting investors’ continued appetite for the country’s elevated yields amid improving macroeconomic fundamentals.
These inflows more than offset demand from importers and other domestic market participants seeking foreign exchange, allowing the naira to strengthen over the review period.
The improvement in market sentiment was also reflected in the foreign exchange forwards market, where expectations of continued currency stability prompted gains across all major contract tenors.
The one-month forward contract appreciated by 1.0 per cent to NGN1,389.15 per US dollar, while the three-month contract strengthened 1.3 per cent to NGN1,424.05 per US dollar.
Similarly, the six-month forward gained 1.1 per cent to NGN1,483.45 per US dollar, while the one-year contract appreciated 1.2 per cent to NGN1,592.28 per US dollar.
The broad-based appreciation across the forward curve suggests market participants expect exchange rate conditions to remain relatively stable over the medium term, despite lingering global uncertainties and persistent demand for foreign currency within the domestic economy.
Supporting the positive outlook, Nigeria’s gross external reserves rose by USD87.40 million to USD52.03 billion as of 23 July 2026, extending a steady build-up in reserves to an eleventh consecutive week.
The sustained increase underscores the Central Bank of Nigeria’s improving external liquidity position and enhances its capacity to support orderly market conditions where necessary.
The continued reserve accumulation has been underpinned by stronger foreign exchange inflows, including oil receipts and capital inflows, providing an important buffer against external shocks and reinforcing confidence in the country’s foreign exchange management framework.
Looking ahead, analysts expect the naira to remain broadly stable in the near term, supported by resilient foreign portfolio inflows, sustained investor confidence and Nigeria’s widening current account surplus.
These factors are expected to continue strengthening foreign exchange liquidity, helping to cushion the market against episodic demand pressures while preserving the currency’s recent gains.
However, market participants will continue to monitor global financial conditions, oil price movements and the Central Bank’s policy stance, as shifts in external capital flows or domestic liquidity conditions could influence the trajectory of the exchange rate in the coming months.
X-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com|govandbusinessj@gmail.com
