Nigeria’s foreign exchange market recorded a divergence in performance during the past trading week, with the naira strengthening at the official window while weakening in the parallel market, reflecting ongoing liquidity constraints in the informal FX segment.
Data from the Central Bank of Nigeria (CBN) showed that the naira closed the week stronger at the Nigerian Foreign Exchange Market (NFEM), appreciating week on week despite intermittent pressure from rising demand toward the end of the period. According to the apex bank’s daily FX publication, the local currency settled at ₦1,423.17 per US dollar, representing a ₦7.70 gain compared to the previous week’s closing level.
On average, the naira exchanged at approximately ₦1,421.90 per dollar during the week, supported by inflows from Foreign Portfolio Investors (FPIs) and improved dollar supply from domestic market participants. These inflows provided temporary relief to the official market, helping the naira maintain relative stability for most of the trading sessions.
The week opened on a mildly positive note, with the official exchange rate firming slightly by one basis point to ₦1,429.31 per dollar on Monday. The appreciation trend persisted through midweek, with the currency strengthening steadily to ₦1,418.26 per dollar as supply conditions improved.
However, as the week progressed, FX demand began to outweigh available supply, leading to a modest reversal in gains. By the close of trading, the naira weakened marginally to ₦1,423.17 per dollar, erasing part of its earlier appreciation.
In contrast, conditions in the parallel market remained significantly tighter. Dollar scarcity in the informal FX segment pushed the naira lower, with the currency depreciating by ₦5 week on week to close at ₦1,480 per dollar. The widening gap between official and street market rates highlighted persistent structural challenges in FX distribution and liquidity.
As a result, the spread between the official and parallel exchange rates expanded further. According to TrustBanc Financial Group Limited, the FX premium widened to 3.99%, up from 3.09% in the previous week, despite Nigeria’s external reserves recording an increase.
Figures released by the CBN showed that gross external reserves rose by $100.56 million to $45.67 billion. The increase occurred against a backdrop of heightened uncertainty in global commodity markets, particularly energy and precious metals.
Crude oil prices, which play a critical role in Nigeria’s FX earnings, experienced volatility during the week. Early price declines driven by supply disruptions from Venezuela were reversed as global markets reacted to rising geopolitical risks. Intensifying protests in Iran and renewed escalation in Russia’s war with Ukraine raised concerns over potential supply shocks.
Brent crude oil climbed $2.59, representing a 4.26% week-on-week gain, to settle at $63.34 per barrel. Similarly, U.S. West Texas Intermediate (WTI) crude advanced by $1.80, or 3.14% week on week, closing at $59.12 per barrel.
Gold prices also recorded strong gains during the week as investors sought safety amid macroeconomic and geopolitical uncertainty. Weaker-than-expected U.S. payroll data reinforced expectations of a more cautious monetary policy stance, boosting demand for safe-haven assets.
Spot gold prices surged 4.16% week on week to close at $4,510.45 per ounce, while gold futures rose 3.58% to settle at $4,500.90 per ounce, underscoring sustained investor appetite for hedging instruments.
Looking ahead, analysts at AIICO Capital expect market sentiment to remain cautious and data-dependent in the coming week. Investor focus is expected to centre on upcoming U.S. labour market data, which could shape global risk appetite. Meanwhile, commodity prices—particularly crude oil, amid supply risks linked to Venezuela and Iran—are likely to continue influencing FX and broader financial market direction.
