Naira Recovers N5.75 at Official Window as Liquidity Boost Counters Reserve Dip

 

The Nigerian naira recovered from a two-day loss on Tuesday, appreciating by N5.75 (about 0.42 per cent) at the official foreign exchange market.

According to data from the Central Bank of Nigeria (CBN), the local currency closed at N1,382.63 per US dollar at the Nigerian Foreign Exchange Market (NFEM), compared to N1,388.38 per dollar on Monday following the Sallah break resumption.11a622

This gain marks a reversal after the naira had posted modest declines earlier in the week. Prior to the break, the currency had been on a steady appreciation path before slipping to N1,353.90 per dollar on March 18.fb0bc1

In the parallel (black) market, however, the naira weakened by N10, trading at N1,425 per dollar against N1,415 the previous day. This widened the gap between the official and parallel rates to around N33–N42, depending on the source.a1bbcc

The naira also lost ground against other major currencies in the parallel market: it shed N25 against the British pound to close at N1,920/£1 and N20 against the euro to N1,630/€1, while remaining flat against the Canadian dollar at N1,000/CA$1.586e64

Analysts attribute the official market gain to improved liquidity conditions, with foreign exchange inflows rising significantly in recent months. February saw total FX inflows jump 45 per cent month-on-month to $4.4 billion, largely driven by foreign portfolio investors attracted to Nigeria’s high-yield environment.86cd59

This liquidity support helped offset a continued slide in Nigeria’s external reserves, which fell 0.84 per cent to $49.60 billion as of March 23. Despite the headline decline, experts note substantial improvement in the quality and usability of reserves, with net usable reserves rising sharply in recent years due to forex market unification, subsidy removal, and other reforms. Gold holdings have also bolstered the reserve portfolio.fa99ef

The development underscores the delicate balance in Nigeria’s FX market, where short-term pressures persist even as structural improvements enhance long-term resilience.

Market watchers will be closely monitoring CBN interventions and inflow trends in the coming days for further signals on the naira’s direction.