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Data from the Central Bank of Nigeria showed the indicative exchange rate at the Nigerian Foreign Exchange Market rose from N1,362 per dollar in the previous session to N1,361 on Thursday. In the parallel market, where retail buyers and small businesses source foreign currency, the dollar traded around N1,380, compared to N1,382 recorded earlier in the week.
The naira has gained roughly 1.2 percent in the official market since the start of May, when it traded at N1,375.5 per dollar. On Tuesday, the currency closed at N1,362 in the official window, and by Wednesday it had moved to N1,357.34 on the back of a sharp rise in market turnover. Thursday’s rate of N1,361 represented a slight pullback from that midweek high but remained stronger than the week’s opening levels.
Trading activity in the interbank segment surged. Turnover rose to $158.2 million on Thursday, a 120.9 percent jump from the $71.6 million recorded a day earlier. Analysts described the increased volumes as a sign of active price discovery, where businesses and traders respond to daily exchange rate movements rather than simply hedging against anticipated losses.
The gap between the official and parallel market rates stood at about N21 per dollar on Thursday, widening slightly from N20 recorded on Tuesday. A narrower gap generally signals reduced pressure on the formal banking system, though the margin has fluctuated in recent days.
Currency traders and market observers attributed the naira’s performance to a combination of factors. Central Bank policies aimed at boosting dollar liquidity and curbing volatility in the foreign exchange market have provided support. On the global side, a weaker U.S. dollar has also helped. The dollar index slipped to 97.902 on Thursday, down from nearly 99 the previous week. Hopes for a de-escalation in the Iran-U.S. conflict have pulled oil prices lower and eased inflation fears, softening the greenback and benefiting oil-exposed currencies like the naira.
High interest rates in Nigeria have continued to attract foreign investors to naira-denominated assets, including treasury bills. This has contributed to capital inflows that support the local currency. However, more than N10.53 trillion in maturing treasury bills and open market operation instruments is expected to enter the financial system this month, creating a challenge for the central bank as it works to absorb surplus funds and keep the currency stable.
Nigeria’s external reserves stood at $48.33 billion as of May 5, a marginal decline from $48.34 billion. Reserves have edged downward in recent weeks, partly due to central bank interventions and the settlement of foreign obligations. Some analysts have flagged the decline as a source of underlying pressure, but others note the reserve position remains strong enough to support near-term exchange rate stability. The Central Bank has projected that reserves could reach $51 billion by the end of the year, supported by ongoing monetary reforms and improved investor confidence.
The naira has strengthened from around N1,440 per dollar at the start of the year, driven by higher foreign exchange inflows and regular central bank interventions. Oil prices remaining above $75 per barrel and Nigeria’s crude production levels have also bolstered the country’s foreign currency position.
Looking ahead, market observers expect the naira to trade within a relatively stable range in the near term, provided forex inflows improve and external reserves do not fall sharply. However, they caution that risks remain, including global geopolitical tensions, possible swings in oil prices, and the upcoming maturities of large volumes of government securities that could inject liquidity and test the currency’s footing.