Naira strengthens for third consecutive day as external reserves rebound to $38.53bn

The Nigerian naira extended its winning streak at the official foreign exchange market on Wednesday, appreciating to N1,583 per dollar, up from N1,588.5/$1 recorded the previous day, according to data from the Central Bank of Nigeria (CBN).

This marks the third consecutive day of gains for the local currency, which opened the week at N1,597/$1 on Monday.

Intra-day trading figures showed the naira traded as high as N1,590/$1 and as low as N1,582.5/$1, with a simple average of N1,584.25/$1. In the cross-currency segment, the naira exchanged for N2,126.23/£1 and N1,795.07/€1 at the official market.

The parallel market remained relatively stable, with the naira closing at N1,625/$1 on Wednesday, unchanged from Tuesday and slightly stronger than the N1,627/$1 recorded on Monday.

In terms of other major currencies, the naira strengthened marginally against the pound sterling, rising from N2,142.00/£1 on Monday to N2,155.00/£1 by Wednesday. Against the euro, it traded at N1,820/€1 on Monday and Wednesday, with a minor uptick to N1,825/€1 on Tuesday.

Meanwhile, Nigeria’s external reserves rose to $38.53 billion as of Tuesday, climbing from $38.50 billion the previous day. The uptick reflects a broader rebound seen in May after months of decline earlier in the year.

The highest reserve level this year was recorded on January 20 at $40.15 billion, before falling below $38 billion in April due to declining oil prices, external debt repayments, and increased FX demand.

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The May recovery saw reserves climb to $38.12 billion by May 9, $38.21 billion by May 12, and $38.38 billion by May 16, marking a $260 million increase in one week, bolstered by improved capital inflows.

Following Tuesday’s Monetary Policy Committee (MPC) meeting, CBN Governor Olayemi Cardoso said the recent appreciation of the naira and the uptick in reserves underscore the impact of ongoing monetary reforms.

He noted that net external reserves—a more reliable indicator of Nigeria’s usable FX buffer—have surged from just over $3 billion to nearly $23 billion, calling it a “quantum leap” driven by renewed investor confidence, transparency in FX reporting, and increased market activity.

The World Bank has also acknowledged these gains in its latest Nigeria Development Update (NDU) report titled “Building Momentum for Inclusive Growth.”

The report credits fiscal and monetary reforms, as well as improved revenue mobilisation, for stabilising the economy and enhancing Nigeria’s macroeconomic outlook.

With the naira trading between N1,590/$1 and N1,610/$1 in recent sessions and reserves on a recovery path, market analysts are increasingly optimistic that Nigeria’s financial fundamentals are gradually strengthening, supported by a more transparent and reform-driven monetary regime.