The naira rose to a six-month high of ₦1,514.86 per dollar at the official foreign exchange (FX) market, supported by growth in liquidity and external reserves.
The last time the currency traded stronger than this was on 6 March 2025, when it closed at ₦1,512.30 per dollar.
Movement in the official market
At the Nigerian Foreign Exchange Market (NFEM), the naira appreciated by ₦6.59 or 0.4 percent to close at ₦1,514.86 on Thursday, the final trading day of the week. This was due to a public holiday declared by the Federal Government. The naira had ended the previous session at ₦1,521.45, according to Central Bank of Nigeria (CBN) data.
In the parallel market, the currency held steady at ₦1,535 per dollar. GTBank quoted ₦1,533 per dollar for international transactions on Thursday, compared with ₦1,534 the day before.
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Foreign reserves and market inflows
Nigeria’s foreign currency reserves stood at $41.30 billion as of 4 September 2025, slightly lower than $41.49 billion recorded the previous day, which was a four-year high.
Total FX inflows into the economy reached $29 billion in the first quarter of 2025, up 4 percent quarter-on-quarter and 26 percent year-on-year. This continued a trend that began in the last quarter of 2023, supported by the CBN’s tight monetary policies.
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Outflows on the rise
FX outflows also increased, rising 14 percent quarter-on-quarter and 33 percent year-on-year to $13.8 billion. This was the highest quarterly outflow since the second quarter of 2020. As a result, net FX flows stood at $15.2 billion in Q1 2025, compared with $15.8 billion in Q4 2024.
Analysts at FBNQuest noted that “strong FX inflows in Q1 2025 were mainly from autonomous sources, which surged to $20.7 billion from $16.3 billion in Q4 2024.” This was the highest since the COVID-19 pandemic, though still below the $27.5 billion recorded in Q1 2020.
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Drivers of autonomous inflows
The increase in autonomous inflows was linked to high market interest rates, which attracted carry trade flows, as well as FX market reforms by the CBN that improved transparency and price discovery.
Data from FMDQ showed that foreign portfolio investment (FPI) inflows rose by 40 percent quarter-on-quarter and 101 percent year-on-year to $4.9 billion.
By contrast, inflows through the CBN fell to $8.3 billion in Q1 2025, compared with $11.5 billion in Q4 2024.
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Composition of outflows
On the outflows side, CBN-related FX outflows remained stable at $10.5 billion, accounting for 77 percent of the total. This was largely driven by a 29 percent year-on-year increase in external debt service payments, which reached $1.4 billion.
Meanwhile, autonomous FX outflows rose sharply by 125 percent quarter-on-quarter to $3.2 billion.
Relative stability
The strong growth in autonomous inflows, combined with CBN reforms, has supported exchange rate stability in 2025. The naira has mostly traded between ₦1,500 and ₦1,600 per dollar in the official market, reflecting a more balanced flow of foreign currency.
