Exchange Rate: Naira Appreciates as FX Conditions Improve, Reserves Hit $53.31bn

The naira exchange rate strengthened by 0.7 per cent week-on-week to N1,338.01 per dollar at the close of the week on Friday as increased foreign exchange supply and stronger investor participation provided fresh support for the currency.

The appreciation came alongside a $478.45 million increase in Nigeria’s gross external reserves, which rose to $53.31 billion as of August 28, 2026.

The combination of stronger reserves and increased dollar supply is providing a more supportive backdrop for the foreign exchange market, with offshore flows linked to investor participation in the Central Bank of Nigeria’s Open Market Operations auction contributing to improved FX liquidity during the week.

The naira’s performance also extended into the forward market, where the currency appreciated by 0.6 per cent across the major contracts.

The one-month forward rate strengthened to N1,361.59/$, while the three-month contract rose to N1,451.27/$. The six-month contract also appreciated to N1,451.27/$, while the one-year forward rate strengthened to N1,556.72/$.

The improvement suggests that market expectations around the naira have remained relatively stable despite persistent pressure on foreign exchange demand.

Experts are optimistic that for now, the currency is expected to trade within a broadly stable range around its current level, supported by resilient portfolio inflows, relatively firm investor sentiment and a widening current account surplus.

The outlook nevertheless remains vulnerable to developments in the oil market, which remains a critical source of Nigeria’s foreign exchange earnings.

According to market experts, a renewed decline in oil-related FX inflows could reduce dollar supply and place fresh pressure on the naira.

For the immediate term, however, the maintained that stronger external reserves and continued portfolio inflows are giving the naira a firmer foundation, with the currency entering September from a considerably more stable position than earlier periods of intense FX volatility.