Naira’s Weekly Performance: Mixed Trends and Analyst Insights
The Nigerian naira experienced a mixed performance throughout the past week, with some fluctuations in its value against the US dollar. Despite a slight rebound at the beginning of the week, the currency ultimately weakened by 0.14 per cent compared to the previous week, closing at 1,532.34/$ at the Nigerian Foreign Exchange Market (NFEM). This marked a modest decline from the previous week’s exchange rate.
On the first trading day of the week, the naira reached a four-month high, settling at 1,518.88/$. However, this positive momentum was short-lived as the currency gradually weakened to 1,530.25/$ and further to 1,533.11/$ before stabilizing at 1,532.34/$ by the end of the week. During the week, the naira fluctuated between a high of 1,538/$ and a low of 1,515/$ on the official market.
At the parallel market, the naira remained within a narrow band, closing the week between 1,535.00/$ and 1,544.00/$. Analysts have highlighted that the Central Bank of Nigeria’s (CBN) interventions and improved foreign exchange liquidity played a crucial role in maintaining stability in the currency.
Cowry Assets Management Limited, in its weekly market report, noted that the naira showed divergent movements across different markets. While it appreciated slightly by 0.06 per cent to close at 1,544.00/$ at the parallel market, it declined at the official market. The report attributed these fluctuations to ongoing supply-demand imbalances and evolving FX liquidity conditions.
Despite the challenges, analysts remain optimistic about the naira’s future performance. They believe that improved oil production and higher oil prices could drive increased dollar inflows, which may help sustain the current pace of reserve accumulation. The positive outlook for oil earnings, combined with steady capital inflows, is expected to provide continued support for the naira and enhance near-term FX market stability.
Recent data from the Nigerian Upstream Petroleum Regulatory Commission indicates that average daily crude oil production (excluding condensates) increased by 3.6 per cent in June 2025, reaching 1.51 million barrels per day (mbpd) from 1.45 mbpd in May. This marks the first time in five months that Nigeria has met its OPEC production quota, reflecting improvements in operational efficiencies and security around key oil-producing assets.
AIICO Capital Limited, in its weekly report, observed that the CBN had intermittently intervened in the FX market during the week. Dollar sales early and late in the week contributed to maintaining relative stability in the naira. The currency closed at 1,532.34/$, down 13.6 basis points (bps) week-on-week. Additionally, the country’s foreign exchange reserves rose by $422 million to $37.85 billion as of Thursday, up from $37.43 billion in the previous week.
Analysts expect the naira to maintain its current range amid improved liquidity. However, markets are closely watching the potential impact of the Monetary Policy Committee’s (MPC) decision starting on Monday. The MPC is expected to announce its policy stance, which could influence the naira’s performance in the coming weeks.
There is a split among analysts regarding the MPC’s potential decision on the benchmark interest rate. On one side, doves advocate for a modest rate cut, citing cooling inflation, a more stable naira, and signs of reform progress. On the other hand, hawks warn that premature easing could undermine the gains made through FX reforms and decelerating inflation, especially considering ongoing food supply shocks and global risks.
Traders are currently positioning themselves cautiously, awaiting the tone of the MPC’s communique for clearer signals. As the central bank prepares to make its decision, the focus will be on how it balances economic stability with the need for continued growth.
