The naira recorded its highest appreciation this year at the close of October, strengthening to ₦1,421.73 per dollar at the Nigerian Foreign Exchange Market, according to data released by the Central Bank of Nigeria (CBN).
This marks a 3.63 per cent appreciation from the exchange rate of ₦1,475.34 per dollar recorded on September 30, 2025, as the local currency traded below the ₦1,500 threshold throughout the month. The naira’s weakest point during October was ₦1,475.35 per dollar on October 17, 2025.
At the parallel market, the domestic currency also maintained relative strength, closing at ₦1,450 per dollar on Friday, according to market intelligence from CardinalStone Partners.
Analysts attributed the naira’s strong performance to increased inflows from foreign portfolio investors (FPIs) and improved confidence in Nigeria’s economic management.
In its weekly market review, AIICO Capital said the appreciation was supported by enhanced liquidity from FPIs who sold off their dollar positions.
“The Nigerian naira appreciated during the week, buoyed by improved foreign currency supply from foreign portfolio investors who sold USD positions, boosting market liquidity and easing demand pressures. The steady inflow of foreign funds strengthened supply conditions across key benchmarks, resulting in a consistent appreciation of the naira as USD availability outpaced demand,” AIICO Capital said.
The firm added that the naira gained 2.48 per cent week-on-week, closing at ₦1,421.73 per dollar, reflecting renewed foreign investor participation and confidence in monetary reforms.
Meanwhile, Nigeria’s external reserves continued their upward trajectory, rising to $43.17 billion as of October 30, 2025, from $42.35 billion on September 30, 2025 — an increase of $819 million, or 1.93 per cent within a month.
This steady build-up in reserves reflects growing foreign asset accumulation and improved external buffers, supported by capital inflows, rising non-oil exports, and moderate import demand.
In its latest macro report, CSL Research noted that the resilience of Nigeria’s external sector, aided by increased domestic refining output and reduced import dependence, played a key role in the naira’s stability.
“A key driver behind this performance has been the resilience of the external sector, even amid relatively weak global oil prices. The current account balance recorded a surplus of about $5.3 billion in Q2 2025, up from $2.9 billion in Q1 2025. This improvement was due to a sharp contraction in imports and a modest increase in export receipts,” CSL Research stated.
The report highlighted the Dangote Refinery’s growing output as a major factor reducing the import bill and easing pressure on the foreign exchange market. “The increase in domestic refined petroleum production has helped to stabilise the naira by cutting fuel import demand,” it added.
CSL Research also pointed to renewed interest from global institutional investors taking long positions in naira-denominated assets, driven by optimism about the government’s reform agenda and recent positive credit rating actions.
“Nigeria has emerged as one of the most attractive destinations for carry trade investors over the past year,” the report noted. “The combination of elevated interest rates and improving exchange rate stability has delivered compelling risk-adjusted returns relative to peers in other emerging markets.”
According to the report, offshore investors who bought one-year Open Market Operation (OMO) bills in late 2024—when stop rates averaged 24 per cent and the naira traded around ₦1,650 per dollar—would currently be earning 36 per cent in U.S. dollar terms.
This carry trade profitability, alongside continued CBN interventions and stronger trade balances, has reinforced foreign investor interest and contributed to the naira’s performance.
Market watchers expect the naira to maintain its relative stability in the coming weeks as foreign inflows remain strong and local production gains improve Nigeria’s external position.
