The naira recorded a notable gain in the official foreign exchange market on Wednesday, supported by a sharp increase in trading activity at the Nigerian Foreign Exchange Market (NFEM). Fresh data from the Central Bank of Nigeria showed the local currency appreciated by 0.7 percent, closing at N1,357.34 per dollar compared to N1,366.56 recorded a day earlier. The improvement reflects growing confidence in the FX market as liquidity conditions continue to strengthen.
Trading activity in the market surged significantly, with total transactions rising to 287 deals, up 25 percent from the previous day. FX turnover also jumped by 59.2 percent to $424.46 million, marking a $157.88 million increase from $266.58 million. Analysts say the spike in turnover signals renewed participation and improved dollar supply, both of which are critical in stabilizing the naira.
The interbank segment mirrored this positive momentum, recording a sharp rise in activity. The number of deals climbed by 62.6 percent to 161, while turnover surged by 120.95 percent to $158.18 million from $71.59 million. This uptick suggests that banks and financial institutions are becoming more active in currency trading, further boosting market liquidity.
However, despite the encouraging performance in the FX market, Nigeria’s external reserves continued to decline, falling to $48.33 billion as of May 5, 2026. Meanwhile, at the parallel market, the naira traded between N1,395 and N1,400 per dollar, leaving a gap of about N43 between official and unofficial rates. While this spread remains relatively moderate, it still reflects underlying pressures in the broader FX ecosystem.
A recent report by the Financial Markets Dealers Association (FMDA) noted that the naira’s performance in April was largely driven by improved FX liquidity and stronger capital inflows rather than oil price movements. The report also cautioned that the currency could face mild pressure in the near term due to large maturing securities, particularly Open Market Operations exceeding N7 trillion. Still, expected inflows from autonomous sources may help cushion the impact and sustain relative stability in the market.
source: Business day