The Nigerian naira came under renewed pressure on Wednesday, falling to its weakest level in nearly two months at the official foreign exchange market, despite improving liquidity conditions and a continued rise in the country's external reserves.
Latest figures released by the Central Bank of Nigeria (CBN) showed that the local currency depreciated by N9.44 against the United States dollar, with the exchange rate closing at N1,380.08/$ on Wednesday. This represents a 0.68 percent decline from the N1,370.64/$ recorded on Tuesday at the Nigerian Foreign Exchange Market (NFEM).
The latest performance marks the naira's lowest level since April 28, 2026, when it traded at N1,380.71 per dollar, underscoring persistent demand pressures in the foreign exchange market despite recent improvements in supply.
Market analysts attribute the weakening of the naira largely to increased demand for the greenback, which appears to have outweighed the positive impact of stronger foreign exchange inflows and growing market liquidity.
Although official turnover data for Wednesday was not available at the time of filing this report, trading activity remained vibrant. On Tuesday, the number of deals executed at the NFEM increased to 320, up from 290 transactions recorded on Monday, representing a 10.34 percent rise.
Similarly, total market turnover surged significantly, climbing to $660.25 million from $404.94 million recorded a day earlier. The increase of $255.31 million, or 63.05 percent, points to stronger foreign exchange supply and heightened trading activity within the official market.
The depreciation was not limited to the official market. In the parallel market, commonly referred to as the black market, the naira also weakened, closing at N1,400 per dollar on Wednesday compared to N1,395 per dollar the previous day.
Despite the losses recorded in both segments of the market, the spread between the official and parallel market exchange rates narrowed further. The gap shrank to N20 on Wednesday from N31 earlier in the week, suggesting a gradual convergence of rates across the two markets.
External Reserves Hit 17-Year High
In a development that could provide some support for the local currency in the medium term, Nigeria's external reserves continued their upward climb, reaching their highest level in 17 years.
Data published on the CBN's website showed that the country's reserves stood at $51.17 billion as of June 23, 2026. This represents an increase of $13.65 billion, or 36.38 percent, compared to the $37.52 billion recorded during the corresponding period in 2025.
The growth in reserves reflects sustained foreign exchange inflows into the economy and strengthens the apex bank's capacity to meet external obligations, support market stability, and intervene when necessary to moderate excessive volatility in the currency market.
FX Inflows Remain Strong Despite Monthly Decline
Further insight into the foreign exchange market was provided in the CBN's Monthly Economic Report for February 2026, which showed that Nigeria recorded a net foreign exchange inflow of $6.92 billion during the month.
Although this was lower than the $9.22 billion net inflow recorded in January, it still highlights the resilience of foreign exchange earnings amid changing market conditions.
According to the report, aggregate foreign exchange inflows declined to $9.43 billion in February from $12.23 billion in January. Total outflows also moderated during the period, dropping to $2.50 billion from $3.01 billion in the previous month.
Foreign exchange inflows through the CBN amounted to $3.09 billion in February, down from $4.66 billion recorded in January. Autonomous inflows also moderated to $6.34 billion.
On the outflow side, transactions conducted through the apex bank increased slightly to $1.75 billion from $1.57 billion, while autonomous outflows declined sharply to $0.75 billion from $1.44 billion.
As a result, transactions routed through the CBN generated a net inflow of $1.34 billion, while autonomous sources contributed a significantly higher net inflow of $5.58 billion. These figures compare with net inflows of $3.09 billion and $6.14 billion respectively in January.
February Data Showed Temporary Naira Recovery
Interestingly, the February economic report painted a more positive picture of the naira's performance during that period.
The average exchange rate appreciated by 4.51 percent to N1,355.34 per dollar in February, compared to N1,416.52 per dollar in January. Likewise, the end-of-period NFEM exchange rate improved to N1,363.40 per dollar from N1,386.55 per dollar in the preceding month.
However, despite the stronger exchange rate recorded during February, overall activity in the official market slowed. Average daily foreign exchange turnover at the NFEM fell by 10.29 percent to $527.17 million from $587.62 million recorded in January.
The latest market developments highlight the delicate balance between foreign exchange supply and demand in Nigeria's economy. While rising reserves and healthy FX inflows continue to provide support for the market, persistent demand for dollars remains a major factor influencing the naira's short-term direction.