Naira Strengthens to 10-Month High Amid Rising Foreign Exchange Inflows

The Nigerian naira has surged to its strongest level in ten months, buoyed by a steady rise in foreign exchange inflows, improved liquidity in the market, and renewed confidence from both investors and exporters. The latest data from the Central Bank of Nigeria (CBN) and market reports indicate that the local currency has appreciated significantly against the United States dollar, marking one of its most stable performances since late 2024.

At the close of trading on Thursday, the naira strengthened to around ₦1,140 per dollar on the official market and averaged ₦1,150/$ at the parallel market, its best showing since December 2024. The appreciation represents a notable improvement from previous months when the currency hovered near ₦1,500/$, weighed down by limited forex supply, speculative trading, and weak investor sentiment.

Currency dealers attribute the upward momentum to increased dollar inflows from foreign portfolio investors, oil revenue remittances, and steady interventions by the CBN to stabilise the market. The apex bank has, in recent weeks, implemented a series of reforms aimed at improving transparency and boosting liquidity in the foreign exchange ecosystem.

According to CBN Governor Olayemi Cardoso, the recent gains reflect the impact of deliberate policy actions designed to restore market confidence and ensure sustainable exchange rate stability. Speaking during an economic briefing in Abuja, Cardoso said, “The improvement in the naira’s performance is a result of coordinated efforts to strengthen our monetary framework, enhance transparency, and attract credible foreign investments.”

He added that the bank had increased its monitoring of foreign exchange inflows while ensuring that export proceeds are duly repatriated into the official market. “Our approach focuses on encouraging genuine inflows and discouraging rent-seeking behaviour in the FX space,” Cardoso said.

Market analysts have also credited the naira’s rebound to improved oil earnings and renewed investor appetite for Nigerian assets. The rise in crude oil prices, which now trade at around $87 per barrel, has boosted Nigeria’s external reserves to approximately $36.4 billion, the highest in almost a year.

Financial analysts at Cordros Capital noted that the sustained inflows from oil exports and remittances have significantly eased the liquidity pressure that previously plagued the market. “There is now better access to dollars at official windows, and the parallel market is beginning to reflect the same trend,” the firm said in its weekly report.

In addition, the government’s efforts to attract foreign investment through improved ease of doing business, stable macroeconomic reforms, and ongoing fiscal discipline have contributed to the naira’s recovery. The removal of multiple exchange rate windows, a measure introduced by the CBN earlier in the year, is said to have restored a sense of fairness and transparency in the market.

Economists believe that the latest currency stability could boost business confidence and reduce inflationary pressures. With the naira gaining strength, importers are expected to experience lower costs, which could gradually translate into reduced consumer prices over the coming months. Inflation currently stands at 27.8 per cent, driven largely by high food and energy costs, but experts say a stable exchange rate could help moderate this trend.

Commenting on the development, Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), said the appreciation of the naira was “a much-needed relief for the economy.” He noted that foreign exchange stability would restore predictability to business planning and investment decisions. “If this positive momentum is sustained, it could lead to improved production levels, stronger investor confidence, and gradual recovery in purchasing power,” he added.

However, while the current gains are encouraging, analysts have cautioned that sustaining the naira’s strength will require consistent policy discipline and diversification of forex sources beyond oil. Nigeria’s foreign exchange earnings remain heavily dependent on crude oil exports, which account for over 85 per cent of total inflows.

An independent economist, Prof. Bismarck Rewane, emphasised that the government must consolidate these gains through improved non-oil exports and incentives for diaspora remittances. “The fundamentals are improving, but we must remain vigilant. Oil prices are volatile, and global economic conditions can shift quickly. Nigeria must strengthen its non-oil sectors to sustain long-term stability,” he said.

To complement these efforts, the CBN has also intensified its crackdown on speculative activities within the forex market. Last week, it issued new directives to authorised dealers and banks to ensure full compliance with FX reporting and transparency standards. The regulator also warned against hoarding and manipulation of foreign exchange by market operators.

The apex bank further disclosed that it was working closely with the Nigerian National Petroleum Company Limited (NNPC Ltd.) to ensure consistent supply of dollar proceeds from oil sales into the market. The NNPC has reportedly increased its direct remittances to the CBN, which has helped boost liquidity and stabilise supply.

Meanwhile, manufacturers and business groups have welcomed the naira’s appreciation, saying it could help lower input costs and boost productivity. The Manufacturers Association of Nigeria (MAN) noted that exchange rate stability is crucial for industrial growth, especially for companies that rely heavily on imported raw materials.

In a statement, MAN said, “A stronger naira will enable businesses to plan better, stabilise production costs, and maintain price competitiveness. It also improves investor sentiment, especially among foreign partners looking to enter the Nigerian market.”

As the year winds down, economic observers remain optimistic that the combination of improved FX inflows, fiscal prudence, and regulatory reforms could help the naira maintain its upward trajectory. However, they caution that structural reforms — particularly in infrastructure, power, and governance — remain critical to sustaining the progress.

In conclusion, the naira’s resurgence signals a potential turning point for Nigeria’s financial stability. While the CBN’s policies have started yielding positive results, experts agree that long-term resilience will depend on diversification, fiscal discipline, and effective implementation of the ongoing reforms. For now, both the government and the private sector appear united in ensuring that this momentum is not only preserved but strengthened in the months ahead.