Nigeria foreign exchange reserves have risen above $40 billion for the first time in months, marking the fifth consecutive week of gains. The increase, driven by strong foreign portfolio inflows and sustained Central Bank of Nigeria (CBN) interventions, is expected to support short-term currency stability.
According to CBN figures, gross reserves climbed by $800.51 million in the week ending August 7, reaching $40.16 billion. Analysts say steady inflows from the fixed-income market and targeted dollar sales to banks have helped ease immediate liquidity pressures.
Economists believe this improvement will allow the CBN to maintain its intervention pace in the official market, potentially keeping the naira stable in the near term.
At the Nigeria Foreign Exchange Market, the naira closed at ₦1,535 per dollar, down 1.0% week-on-week. This came despite a $150 million CBN intervention and renewed interest from offshore investors in Open Market Operations (OMO) bills.
In the parallel market, the naira fell 0.52% to ₦1,545 per dollar as demand from businesses and individuals increased. In the forwards market, the naira weakened across all tenors, with the one-month contract at ₦1,575.24 and the one-year forward sliding to ₦1,960.26 per dollar.
Global oil prices fell sharply during the week. Brent crude dropped over 4% to $66.80 per barrel, while West Texas Intermediate fell 4.6% to $64.10. Nigeria’s Bonny Light declined 3.28% to $70.74 per barrel. Analysts cite OPEC+ plans to increase output, slowing global demand, and trade tensions as key drivers.
With crude oil providing over 80% of Nigeria’s export earnings, lower prices could reduce future foreign exchange inflows. However, the stronger reserve position and continued portfolio investments may cushion the short-term impact.
Cordros Research projects that elevated OMO yields and a softer US dollar will sustain foreign portfolio inflows, boosting Nigeria foreign exchange reserves. The firm also expects improved market confidence and fewer incentives for naira speculation.
Cowry Asset Management notes potential volatility from commodity markets but believes the naira can remain steady at the official window if the CBN maintains liquidity injections and curbs excess demand.
In recent months, the CBN has intensified monetary tightening and increased market interventions to attract capital inflows, restore investor confidence, and narrow the gap between official and parallel market rates. Offshore interest in government securities has risen since mid-year, supported by double-digit yields and improved transparency.
The trajectory of Nigeria foreign exchange reserves will depend on oil price trends, CBN liquidity actions, and investor sentiment. While sustained oil price weakness could pressure reserves, high yields, steady portfolio inflows, and robust buffers currently offer protection against sharp volatility.
