Naira Strengthens as Dollar Falls, External Reserves Cross $40bn for First Time in Months

The Naira strengthened against the US dollar in the Nigerian Foreign Exchange Market (NFEM) on August 13, 2025, closing at N2 per dollar, according to data from the Central Bank of Nigeria (CBN). Market watchers attribute this rally to a slowdown in the demand for foreign currency and an increase in foreign exchange inflow from exporters.

The external reserves of Nigeria crossed $40 billion for the first time in months, signaling a boost in investor sentiment. However, there is a widening gap between the official market rate and the street trading rate, indicating ongoing pressure in the parallel market.

Factors such as global commodity and currency market trends, as well as expectations of a US Federal Reserve interest rate cut, could influence Nigeria's export earnings and FX stability in the coming weeks. While the naira's outlook is positive, sustaining gains will require continued foreign investment and managing speculative demand.

The CBN may need to intervene aggressively to maintain balance in the market.