The Nigerian naira experienced a significant uptick across all tenors in the forward foreign exchange (FX) market, reflecting improved sentiment and stronger liquidity conditions.
Investor optimism continued to drive positive trends in Nigeria’s FX space last week, with the local currency gaining ground in the forward market. Market data revealed that the 12-month forward contract appreciated to N1,879.61 per US dollar—a 4% increase week-on-week.
The naira kicked off July on a strong footing at the Nigerian Foreign Exchange Market (NFEM), buoyed by a 3.56% month-on-month rise in June, closing that month at N1,529.71 per dollar, according to insights from AIICO Capital Limited.
Analysts attributed the currency’s momentum to continuous FX inflows sourced from foreign portfolio investors (FPIs), export earnings, and diaspora remittances. These inflows, coupled with stable liquidity, reinforced investor confidence.
Beginning July with a 2.08% weekly gain, the naira traded as low as N1,535 per dollar. Subsequent sessions saw further strengthening, with exchange rates reaching N1,539.24 and ultimately closing at N1,529.71—its highest level since March.
Contributing to this stability was a reported $500 million private placement involving the Central Bank of Nigeria (CBN) and a $61 million FX injection, which provided much-needed liquidity in the market.
FX turnover also saw a notable spike, with a single-day session in late June reaching $324 million. However, despite these gains, Nigeria’s external reserves declined by $1.1 billion over the month, settling at $37.21 billion, largely due to the CBN’s interventionist efforts to stabilize the market.
The forward market showed gains across board. According to Cordros Capital Limited, the one-month forward FX contract appreciated by 1.1%, ending at N1,566 per dollar. The three-month and six-month tenors climbed 2.0% and 3.0% respectively, closing at N1,622.20 and N1,707.98 per dollar.
The one-year forward contract remained the best performer with a 4.0% gain, highlighting growing optimism for the naira’s medium-term outlook.
Cordros Capital analysts noted that current market dynamics, especially the increase in FX inflows from both domestic and foreign players, are likely to support the naira’s stability in the short term. However, they also warned that potential global economic pressures could still pose a downside risk to the local currency’s trajectory.
With investor sentiment on the rise and regulatory measures maintaining a delicate balance in the market, the naira appears poised to navigate the coming weeks with greater resilience.
 market, reflecting improved...){kind=link}