Week Ending: Friday, October 10, 2025
The naira remained range-bound during the week, with official rates hovering in the mid-₦1,400s and parallel market quotes staying elevated near ₦1,480-₦1,500. Market volatility subsided after early October fluctuations, as the CBN maintained a hands-off approach while conducting selective liquidity operations.
The week was characterized by softer oil prices, moderating inflation, and steady remittance inflows that provided baseline FX supply support.
Current Exchange Rates
Official Market (NFEM)
- USD/NGN: ₦1,455 – ₦1,472 (virtually flat week-over-week, <1% movement)
- Weekly Range: Mid-₦1,460s throughout the week
- Market Behavior: Stable with minimal intraday volatility
Parallel/BDC Market
- USD/NGN: ₦1,485 – ₦1,500+ (closing October 10)
- Premium to Official: ₦15-45 (reflecting persistent retail dollar demand)
- Intraday Activity: Some vendors reported highs near ₦1,496
Cross-Currency Rates
- GBP/NGN: ₦1,950 – ₦2,000 range (Friday close ~₦1,947-₦1,954)
- EUR/NGN: Modest movement in line with global currency dynamics
- Driver: Movements primarily driven by EUR/USD and GBP/USD fluctuations rather than Nigeria-specific factors
Key Economic Indicators
Monetary Policy & Inflation
- Headline CPI: 20.12% (August 2025, continuing disinflation trend)
- CBN Stance: Accommodative compared to 2024 tightening cycle
- Policy Approach: Market-based mechanisms with occasional liquidity support
- FX Operations: Selective window interventions; no large announced one-off sales this week
Oil Market Developments
- Brent Crude: $62-64/barrel (down during the week)
- Pressure Points: US-China trade tensions weighing on prices
- Implication: Potential downside risk for Nigeria’s oil revenue and FX supply
External Reserves
- Status: CBN continuing reserve rebuilding narrative
- Awaiting: Next official update on reserve levels
Market Dynamics
Supply-Side Factors
Supporting FX Availability:
- Remittance Flows: Steady inflows continuing to anchor supply
- Corporate Flows: Institutional and corporate transactions providing liquidity
- Interbank Liquidity: Adequate for daily settlement needs
Demand-Side Pressures
Maintaining Steady Demand:
- Import financing requirements
- BDC and retail physical dollar needs
- Corporate FX obligations
Market Sentiment
Subdued Volatility:
- Speculative flows muted compared to early 2025 spikes
- No sustained momentum toward sharp depreciation
- Market operating within CBN’s guarded band
- Intraday swings are contained without major dislocations
Week-in-Review: What Happened
Stability Prevailed
The week was characterized by calm trading conditions with the CBN appearing comfortable, allowing market forces to operate within established boundaries.
The absence of large policy announcements or interventions suggested satisfaction with current market dynamics.
Oil Price Concerns
Brent crude’s decline to $62-64/barrel introduced a cautionary note, as lower oil prices could constrain future FX supply from oil export revenues. However, the immediate impact was limited due to offsetting remittance flows.
Inflation Progress Continues
The ongoing disinflation trend (down to 20.12%) has given the CBN flexibility in its policy approach, allowing it to avoid aggressive tightening that might disrupt FX market stability.
Outlook: Week of October 13-17, 2025
Base Case: Continued Range-Trading
Expected Rate Bands:
- Official NFEM: ₦1,445 – ₦1,480
- Parallel Market: ₦1,480 – ₦1,520
Scenario: Range-bound conditions likely to persist absent major external shocks
Key Factors to Watch
1. CBN Policy Actions
- Any verbal guidance or official FX sales announcements
- Changes to intervention frequency or size
- Updates to FX code implementation
2. Oil Market Trajectory
- Brent price movements linked to US-China trade negotiations
- OPEC+ production decisions
- Global demand outlook revisions
Upside Risks (Naira Appreciation)
- Continued strong remittance inflows
- Reserve rebuilding momentum
- Resolution of US-China trade tensions boosting oil
- Increased foreign portfolio investment
Downside Risks (Naira Depreciation)
- Further Brent crude price declines
- Widening parallel market spreads
- Reduced IFI/corporate inflows
- Deteriorating global EM sentiment
Market Implications
For FX Market Participants
Corporates:
- Plan for trading within established ranges
- Monitor oil price developments for medium-term trends
- Maintain hedging strategies appropriate for range-bound markets
Investors:
- Stable environment conducive for planning
- Watch for any CBN policy shifts that might signal a direction change
- Oil price weakness represents key medium-term risk
Importers:
- Current environment is favorable for predictable planning
- Access to official FX windows appears adequate
- BDC premium stable but elevated
Technical Market Notes
Liquidity Conditions
- Interbank settlement is functioning smoothly
- No reported liquidity stress in official channels
- The parallel market premium suggests some rationing, but not severe
Trading Patterns
- Low volatility regime established
- Intraday ranges compressed
- Market depth appears adequate for normal commercial flows
Spread Analysis
- Official-to-parallel spread of ₦15-45 indicates moderate pressure
- Not at crisis levels, but suggests some demand is not met in official channels
- Spread stability suggests balanced supply/demand dynamics
Summary
The Nigerian FX market entered a consolidation phase in the week ending October 10, with the naira trading in a narrow band across both official and parallel markets.
The CBN’s light-touch approach, combined with steady remittance support and moderating inflation, has created a stable trading environment.
The primary risk remains oil price weakness, which could test the current equilibrium if sustained. Barring external shocks, expect range-bound trading to continue in the near term.
