The naira weakened slightly against the dollar on Tuesday in the official foreign exchange (FX) market as daily trading activity declined, despite continued growth in Nigeria’s external reserves.
Data published by the Central Bank of Nigeria (CBN) showed that the naira depreciated by N4.75, as the dollar was quoted at N1,364.89 on Tuesday at the Nigerian Foreign Exchange Market (NFEM), representing a 0.35 percent loss from the N1,360.14 quoted on Monday.
In the parallel market, also known as the black market, the local currency held steady at N1,424 per dollar on Tuesday. The gap between the official and parallel market rates widened to 4.71 percent, compared with 4.32 percent on Monday.
Total turnover at the interbank segment of the FX market declined by 86.41 percent to $29.06 million on Tuesday from $213.85 million recorded on Monday. The number of deals at the interbank market also dropped by 74.18 percent, from 182 on Monday to 47 deals on Tuesday.
Although NFEM figures for deals and turnover were not available at the time of reporting, activity also moderated, with total turnover declining by 48.24 percent to $646.51 million on Monday from the $1.25 billion recorded in a single trading session on Friday.
However, the number of deals at the NFEM rose to 348 on Monday, representing a 27.47 percent increase from the 273 deals recorded on Friday.
Nigeria’s external reserves, which provide the CBN with the capacity to support the naira and meet the country’s external obligations, have maintained a steady growth trajectory, rising to $52.14 billion as of August 10, 2026.
The latest figure represents a 29.41 percent increase from the $40.29 billion recorded on August 8, 2025, according to data published on the CBN website.
A new report by Quest Merchant Bank said Nigeria’s gross external reserves increased by $465 million month-on-month to $51.9 billion at the end of July 2026.
“This marks the third consecutive month of reserve accretion, following increases of $1.9 billion and $1.2 billion in June and May 2026, respectively, resulting in an impressive gain of $6.4 billion over the first seven months of 2026,” the report said.
According to the report, the increase places Nigeria among the strongest reserve accretors across major African economies this year.
It noted that external reserves had risen to a 17-year high, reaching levels last seen in January 2009.
The sustained accumulation reflects a combination of factors, including elevated crude oil prices amid Middle East tensions, a gradual recovery in Nigeria’s crude oil output to about 1.7 million barrels per day, robust capital inflows supported by the CBN’s FX market reforms and a tight monetary policy stance.
On a gross basis, the external reserves provide an estimated 14.5 months of merchandise import cover and 10.0 months of total import cover, including services, based on balance of payments data for the 12 months to December 2025.
According to the CBN, net external reserves increased to $40.0 billion in July 2026 from $34.8 billion at the end of 2025, indicating a further strengthening of Nigeria’s reserve buffers.
This translates to an import cover of about 11.2 months for merchandise imports and 7.7 months for total imports, well above the conventional three-month adequacy benchmark.
Illustrating the strength of Nigeria’s external buffers and the CBN’s intervention capacity, the bank responded to seasonal demand pressures in July with FX sales of about $1.4 billion, up from $320 million in the previous month.
The scale of the liquidity support helped preserve orderly market conditions and contributed to the naira’s modest appreciation to N1,368 per dollar during the month.
Beyond Nigeria, Egypt’s net external reserves posted the most significant month-on-month increase of $1.2 billion to $56.3 billion, driven by robust capital inflows, increased external financing and favourable revaluation gains on gold reserves.
South Africa’s international liquidity position also increased by $424 million month-on-month to $71.8 billion, supported by valuation gains on gold holdings and foreign currency assets, as well as positive mark-to-market adjustments on forward positions.
“Looking ahead, we remain constructive on Nigeria’s external position, with reserve buffers expected to strengthen further on the back of supportive oil market dynamics, resilient capital inflows, and the credibility of the monetary authorities’ policy framework,” analysts at Quest Merchant Bank said.
Hope Moses-Ashike | Businessday NG