In a notable shift within Nigeria’s foreign exchange landscape, the naira continued to grow against the US dollar as diminished demand from corporates reduced pressure on the currency. Improved dollar liquidity, largely attributed to interventions by the Central Bank of Nigeria (CBN), has helped stabilize the naira’s market position.
As of Tuesday, the local currency posted its fifth consecutive day of appreciation, signaling a positive trend in currency valuation. Market intelligence obtained by MarketForces Africa reveals that the dwindling corporate demand for foreign exchange has coincided with steady inflows from non-oil exporters and international oil firms—especially during the month of May.
A senior analyst from LSintelligence Associates, in a discussion with MarketForces, noted that businesses that held FX liabilities before the major naira devaluation suffered significant financial hits. Consequently, many of these companies are now reassessing their exposure to foreign currency risks, reducing new dollar-denominated liabilities and focusing on resolving pre-existing ones.
“Firms are beginning to tread carefully,” the analyst said. “The painful lessons of past devaluations are shaping current financial strategies, including trimming import activities and limiting foreign borrowings.”
This strategic retreat by corporates comes as part of a broader market reaction to the federal government’s naira reforms. On Tuesday, currency transactions took place within the N1,577.01 to N1,582.00 range, with the naira closing stronger at N1,579.275—registering a 15-basis-point gain.
Analysts expect the spot exchange rate to remain range-bound in the short term, supported by continued FX inflows from the CBN and other sources. Despite this positive outlook, Nigeria’s gross external reserves declined to $38.391 billion this week, reflecting fluctuations in oil revenues, inconsistent diaspora remittances, and other capital inflows.
Meanwhile, global oil markets saw a price rebound as tensions flared across several geopolitical hotspots. Brent crude futures rose by $1.11 (1.7%) to settle at $65.74 per barrel, while the West Texas Intermediate (WTI) benchmark climbed by $1.17 (1.9%) to close at $63.69.
In contrast, gold prices faced downward pressure, sliding 1% after recently hitting a four-week peak. A stronger US dollar contributed to this decline as market participants awaited a potential diplomatic call between US President Donald Trump and Chinese President Xi Jinping, amid renewed tensions over trade policies.
With investor sentiment swaying between currency performance and commodity price movements, the naira’s current trajectory appears promising—so long as the reduced FX demand trend and stable inflows continue.