Naira sustains year-to-date stability on $42bn external reserves, weekly inflows

The naira has maintained an appreciation trajectory across official and unofficial foreign exchange markets, buoyed by rising weekly inflows and external reserves, which have grown to $42.03 billion mark this month.

Data published by the Central Bank of Nigeria (CBN) showed that the naira has strengthened by 3.5% year-to-date, with the dollar quoted at N1,488.60 on Monday, gaining N52.76 compared to N1,541.36 at the beginning of the month at the Nigerian Foreign Exchange Market (NFEM).

On a daily basis, however, the naira weakened slightly, losing 0.04% on Monday from N1,487.89 at the close of trading on Friday at the NFEM.

At the parallel market, commonly referred to as the black market, the local currency appreciated by 9.57% year-to-date, trading at N1,515 per dollar on Monday, compared with N1,660 in January 2025.

Nigeria’s external reserves have also risen, growing by 2.8% year-to-date to $42.03 billion as of September 19, 2025, up from $40.88 billion recorded at the start of the year.

Read also: Naira loses N9.88 to dollar amid rising external reserves

According to a review by Ayodeji Ebo, Managing Director and Chief Business Officer at Optimus by Afrinvest, the naira strengthened by 10.8% year-on-year, closing at N1,498.97 per dollar on September 19, 2025, compared with N1,661.12 per dollar a year earlier at the official Nigerian Foreign Exchange Market (NAFEM). In the parallel market, it gained 9.2% year-on-year, trading at N1,514 per dollar compared to N1,654 per dollar in September 2024.

“For a currency long accustomed to double-digit annual depreciation, these gains represent remarkable progress,” Ebo said.

Ebo explained that three major structural shifts underpin the new trajectory of the naira. The introduction of the B-Match FX platform in December 2024 has restored confidence by reducing opacity and speculation, allowing for fairer price discovery and curbing the rent-seeking practices that plagued Nigeria’s FX markets for years.

The operations of the Dangote Refinery have also been pivotal, as petroleum imports, which previously consumed between 30 and 40% of Nigeria’s FX demand, are easing, thereby reducing demand pressure on the dollar. This single development, he noted, may prove to be one of Nigeria’s most consequential economic turning points.

In addition, stronger liquidity and rising reserves have served as anchors of confidence. Average daily FX market turnover has risen by 53.9% to $317 million, while reserves have climbed 12.6% to $41.2 billion. Stronger inflows from the Nigerian National Petroleum Company (NNPC), renewed interest from foreign portfolio investors, and higher remittance inflows have further strengthened Nigeria’s external buffers.

While these gains are promising, Ebo cautioned that two realities must be acknowledged. The naira’s current stability is still policy-assisted rather than productivity-driven, and without structural growth in non-oil exports and industrial output, Nigeria remains vulnerable to oil price shocks and global capital movements. He stressed that maintaining discipline is critical, as any return to multiple exchange rates, opaque interventions, or fiscal dominance could undermine the fragile progress achieved so far.

Looking ahead, he expects the naira to trade within a relatively narrow band for the remainder of 2025, supported by stronger FX inflows from oil revenues, more robust reserves, and continued efficiency from the B-Match platform. Seasonal inflows, such as increased remittances during the year-end festive period, are expected to provide additional support. However, risks remain, including a potential sharp decline in oil prices, unexpected fiscal challenges, or disruptions to foreign portfolio inflows, which could test the resilience of the naira.

On balance, the outlook suggests more stability than volatility in the short term, offering much-needed relief for investors and businesses making forward plans.