Naira Wobbles, Black Market, Official Window Narrow Gap as Foreign Reserves Near $40bn

• The Nigerian currency performed mixed in the foreign exchange market on Wednesday, August 6, 2025
• While the naira weakened in the official forex market strengthened in the parallel window, narrowing the FX gap
• However, analysts are optimistic that the local currency will rebound due to the rise in the country’s external reserves

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The Nigerian naira showed mixed performance in the forex market this week, with diverging outcomes between the official and parallel markets.

According to the Central Bank of Nigeria (CBN), the official exchange rate weakened slightly to ₦1,534.43/$ on Wednesday, August 7, 2025, from ₦1,533.10/$ the previous day.

The intraday high touched ₦1,537.25/$, indicating minimal intervention from the apex bank despite recent FX inflows.

Meanwhile, the black market presented a contrasting picture.

The parallel market rate appreciated to ₦1,535/$, driven by intermittent FX demand and moderate supply, especially from Nigerians travelling for holidays and education abroad.

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Reserves surge toward $40 billion

In a major positive development, Nigeria’s gross external reserves rose to $39.814 billion on Monday, August 5, 2025, with consistent inflows recorded since July.

This increase reflects stronger oil receipts, successful open market operations, and foreign investor participation, giving the CBN more room to manoeuvre in the FX market.

Analysts suggest that if current trends continue, Nigeria could cross the $40 billion reserves threshold this week—a psychologically significant marker that could help ease currency pressures in the short term.

CBN keeps a low profile, market reacts

Despite the growing reserves, the CBN has held back from large-scale dollar interventions.

This passive approach may be testing the strength of the market, as spot rates have shown relative stability even without aggressive liquidity support.

Industry watchers believe the apex bank’s silence signals confidence, but note that rising demand for personal and business travel allowances may pressure the naira in the coming weeks.

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Some banks have reported sharp increases in PTA/BTA requests as the holiday season peaks.

Oil and gold add uncertainty to the outlook

On the global scene, oil prices slid to an eight-week low amid geopolitical uncertainties. Brent crude dropped by 95 cents to $66.69/barrel, while WTI shed 97 cents to $64.19/barrel.

These lower prices, if sustained, could limit the CBN’s revenue from crude exports in the coming weeks.

Gold prices also fell, with investors locking in profits and watching for signals from the U.S. Federal Reserve. Spot gold retreated by 0.39% to $3,368.01/oz, while U.S. futures fell to $3,430.52/oz.

Meanwhile, geopolitical tension in Eastern Europe and new U.S. tariffs on India continue to stir uncertainty in global markets.

What lies ahead for the naira

Going forward, analysts say Nigeria’s exchange rate trajectory will depend on oil price stability, CBN’s FX strategy, and foreign investor confidence.

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If reserves surpass $40 billion and the apex bank maintains its grip on policy tightening, short-term naira volatility may ease.

However, global risks—including lower crude prices and lingering geopolitical tensions—mean Nigeria’s economic managers must stay vigilant.

Experts express optimism

Meanwhile, financial experts have expressed optimism that the naira will rebound, stating that the apex bank may intervene again to keep the local currency from sliding below the N1,500 ceiling.

“The good news is that the reserves are buoyant and no foreign investor will be hesitant to come,” Janet Ogochukwu, economist and senior banker, said.

“The naira will remain within the N1,500 threshold. I think that is the aim of the CBN,” she stated

Financial analyst and FX trader, Osas Igho, agreed with Ogochukwu, stating that the naira has remained relatively stable in the last eight weeks, a sign that the CBN is doing something right.

“There is some level of confidence in the FX market. Investors and traders know that the naira will trade between N1,500 to N1,530 per dollar. That’s a good sign and it allows for planning,” he said.

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Naira appreciates against the US dollar

Legit.ng earlier reported that the Nigerian currency, the naira, appreciated against the United States dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, August 4, 2025.

New data showed that the naira gained N1.29 or 0.08% to close at N1,531.95, compared to N1,533.94/$1 exchange rate last Friday.

The naira also gained slightly against the British pound, appreciating by 23 Kobo to trade at N2,038.26/£1, up from the previous session’s rate of N2,038.49/£1.

Source: Legit.ng