The Nigerian naira began the week on a relatively stable note, trading at ₦1,533.67 per dollar on the official market, down slightly by 0.08% from Friday’s ₦1,532.51/$. The intraday performance showed a high of ₦1,535/$ and a low of ₦1,532/$, before closing at ₦1,533/$.
At the parallel market, rates closed on Monday stronger at ₦1,550/$ (sell) and ₦1,535/$ (buy), from ₦1,555/$ (sell) and ₦1540 (buy), reflecting persistent pressure on demand. However, rising foreign exchange reserves continue to anchor currency stability.
Nigeria’s Reserves Hit $40.72 billion
According to data from the Central Bank of Nigeria (CBN), reserves climbed to $40.72 billion, their highest level since June. This gives policymakers greater room to intervene in the foreign exchange market to sustain naira stability.
Stronger reserves bolster investor confidence at times when Nigeria’s economy may face external headwinds.
The reserve build-up is partly supported by improved oil production, which averaged 1.5 million barrels per day in July, according to OPEC data.
Stock Market Performance and Liquidity Conditions
The All-Share Index (ASI) posted a marginal gain of 0.07%, closing at 144,722.47 points and extending its impressive 40.61% year-to-date return. Meanwhile, liquidity tightened as banks ended Monday in negative territory at ₦-94.56bn.
- OMO bill yields dropped sharply by 2.45%, while Treasury bill yields fell slightly.
- Bond yields remained largely unchanged, reflecting investor caution ahead of new policy signals.
In the money market, short-term borrowing costs rose, with the Open Buy Back (OPR) at 32.40% and the Overnight Rate at 32.70%, highlighting tighter cash conditions.
Oil Prices and Global Dollar Strength Weigh on Outlook
Brent crude prices slipped by 1.11% week-on-week to $65.85 per barrel, deepening its year-to-date loss to 11.78%. With Nigeria’s economy still heavily reliant on oil earnings, prolonged weakness in crude prices could cap future gains for the naira.
The US dollar index (DXY) remained above 98 points, strengthened by political developments and better-than-expected US data. However, the Federal Reserve’s dovish outlook— with markets pricing in an 84% chance of a September rate cut, may limit further dollar appreciation.
The naira’s near-term stability rests on robust reserves and improved oil output, but external risks remain significant. A stronger US dollar and weaker oil prices could test the CBN’s resolve to sustain currency stability in the coming weeks.