Week Ending: Friday, October 3, 2025
The Nigerian Naira demonstrated strong performance this week, appreciating 1.02% against the US dollar to close at ₦1,455.
This strength was driven by improved FX liquidity, CBN interventions, and rising foreign reserves now at $43 billion.
The positive momentum reflects enhanced market confidence and effective policy reforms.
Current Exchange Rates
Official Market (NFEM)
- USD/NGN: ₦1,455 (+1.02% week-over-week appreciation)
Parallel Market
- USD/NGN: ₦1,488 (showing similar positive momentum)
Other Major Currencies
- GBP/NGN: ₦2,030 – ₦2,050 (slight appreciation toward early October)
- EUR/NGN: Gained ground slightly, following similar positive trends
The narrowing spread between official and parallel rates indicates improved market confidence and liquidity.
Key Economic Indicators
External Reserves & Liquidity
- Foreign Reserves: ~$43 billion (continued growth)
- Monthly Remittances: ~$600 million (stable inflows)
- Oil Production: Rising, with oil rigs increasing 762% to 69 units over four years
Inflation & Monetary Policy
- Headline CPI: 20.12% (August 2025) – down from 21.88% previously
- CBN Policy: Continued interventionist stance through authorized dealers
- Reform Focus: Market stability, regulatory compliance, and reserve enhancement
Market Dynamics
Supply-Side Strengths
Increased FX Inflows From:
- International Oil Companies (IOCs) provide substantial inflows
- Diaspora remittances are maintaining $600m monthly level
- Foreign portfolio investors are increasing market participation
- Stabilizing oil prices, supporting export revenues
Demand-Side Developments
Moderated Pressure Due To:
- Reduced speculative activities
- More effective CBN regulations
- Improved market confidence
- Better balance between import demand and available supply
Key Demand Sources
- Import financing
- Education abroad payments
- Medical tourism
- Business transactions
Factors Driving Naira Strength
Policy & Regulation
- CBN Interventions: Active supply management through authorized dealers
- Reform Agenda: Enhanced compliance and market transparency
- Investor Confidence: Strengthened by policy consistency and reserve growth
Economic Fundamentals
- Easing Inflation: Down to 20.12%, reducing currency pressure
- Oil Sector Recovery: Increased production and stable prices
- Government Policies: Supporting private sector investment and market regulation
Market Structure
- Reduced Speculation: Tighter regulations curtailing distortive activities
- Improved Liquidity: Multiple sources of FX supply converging
- Balanced Demand: Better management of import and service payment flows
Outlook: Week of October 6-10, 2025
Base Case: Cautiously Optimistic
Expected Scenario:
- Slight further appreciation or stabilization is likely
- Adequate FX market liquidity is to be maintained
- Continued positive momentum supported by: Strengthened foreign reserves, ongoing CBN policy support, easing inflation trajectory, and stable oil revenue inflows
Supporting Factors
- Sustained government and CBN macroeconomic stability efforts
- Reduced speculative distortions in the market
- Continued foreign investment encouragement
- Robust remittance flows
Key Risks to Monitor
- Global Oil Prices: Volatility could impact export revenues and FX inflows
- Geopolitical Events: External shocks affecting global risk sentiment
- Domestic Policy Changes: Any shifts in CBN intervention strategy
- Global Market Conditions: Changes in Emerging Market investor appetite
Market Implications
For Investors
- Improved currency stability enhances investment planning certainty
- Reduced parallel market premium indicates lower FX access risks
- Growing reserves provide a buffer against external shocks
For Businesses
- Better predictability for import planning and pricing
- Reduced hedging costs as volatility declines
- Improved access to FX through official channels
For Policy Makers
- Current reforms are showing measurable positive results
- Continued focus on liquidity management and transparency is needed
- Opportunity to build on momentum with further structural improvements
Summary
The Nigerian FX market showed robust performance in early October 2025, with the naira appreciating across major currencies. This strength reflects the convergence of improved fundamentals, effective policy interventions, and growing market confidence.
The outlook remains positive, contingent on sustained policy support and stable global commodity markets.
This analysis integrates data from:
- Central Bank of Nigeria (CBN) – Official rates, reserves, and policy updates
- Nigerian Foreign Exchange Market (NFEM) – Trading data and liquidity metrics
- Bloomberg & Trading Economics – Market rates and economic indicators
- Nairametrics & Market Reports – Local market intelligence and analysis.
