The naira recorded its first weekly gain of the year on Friday at the official foreign exchange (FX) market, appreciating by N7.68 as improved liquidity, supported by the Central Bank of Nigeria (CBN), boosted market sentiment.
This development comes against the backdrop of a rebound in dollar supply, which rose by 38 percent month on month in December 2025, driven largely by increased FX sales by the CBN, according to data from FMDQ.
Figures published by the apex bank showed that the naira appreciated by 0.5 percent week on week, with the dollar quoted at N1,423.16 on Friday at the Nigerian Foreign Exchange Market (NFEM), compared with N1,430.84 at the close of trading the previous Friday. On a day-on-day basis, the local currency strengthened marginally by 0.2 percent from N1,419.71 quoted on Thursday at the same market segment.
Over the five trading days of the week, the naira gained N6.14, strengthening from N1,429.30 on Monday, the first trading day of the year. In the parallel market, also known as the black market, the naira traded flat at N1,490 per dollar.
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Nigeria’s external reserves, which give the CBN room to intervene in the FX market and manage exchange rate volatility, also improved. Data on the CBN’s website showed that external reserves rose to $45.66 billion as of January 7, 2026, from $45.50 billion on December 31, 2025, representing an increase of 0.4 percent and pointing to stronger inflows and reduced pressure on the FX market.
Total foreign exchange inflows into the FX market climbed by 38 percent month on month to $2.8 billion in December 2025, marking a rebound from the sharp 67 percent contraction recorded in November. Despite the recovery, December’s FX supply still ranked as the second weakest level over the past 16 months, highlighting lingering fragilities in inflows. Apart from domestic corporate inflows, which declined by 5 percent month on month to $420 million, all other FX supply sources recorded improvements during the period.
Analysts at FBNQuest attributed the rebound in FX supply largely to increased activity by the CBN in the market. FX sales by the apex bank rose to $654 million in December, more than double the $318 million sold in the previous month. According to the analysts, the stronger CBN presence reflects deliberate efforts to support market liquidity amid subdued offshore investor participation, as foreign inflows remain relatively weak.
Foreign portfolio inflows increased modestly by 7 percent month on month to $632 million in December, a sharp slowdown compared with the $3.5 billion recorded in October. The softer portfolio flows reflect reduced risk appetite toward year-end, a period when foreign investors typically scale back deployable liquidity while engaging in profit taking and portfolio rebalancing.
“We expect renewed investor activity in the coming months, which should drive stronger momentum in inflows, supported by attractive domestic carry trade opportunities,” FBNQuest analysts said.
On the inflow components, foreign direct investment, the smallest segment, more than quadrupled to $50.1 million in December, rising by 381.7 percent from $10.4 million in the preceding month. On the domestic front, FX inflows from exporters and importers, as well as individuals, also supported the month-on-month rebound, rising by 49 percent and 88 percent to $683 million and $275.3 million, respectively.