The naira strengthened sharply at the official foreign exchange market on Tuesday, appreciating by 1.3% to close at N1,372.91 per dollar, reflecting improving liquidity and stronger supply conditions in the FX market, says Aboki Forex platform.
Data from the Nigerian Foreign Exchange Market (NAFEM) showed the local currency gained N17.45 from the previous day’s close of N1,390.36/$1. During intraday trading, the naira rallied further, with the dollar briefly falling to as low as N1,360 before settling around N1,367.
In contrast, activity in the parallel market remained largely unchanged, as the naira traded flat at about N1,450 to the dollar. This left a spread of roughly N77.09 between the official and unofficial markets, underscoring a gradual narrowing in exchange rate differentials.
Market participants attributed the naira’s performance to increased foreign portfolio inflows, particularly into fixed-income securities.
Figures from Coronation Securities Limited indicated that foreign portfolio investments in fixed income amounted to about $0.31 billion, accounting for nearly half of total FX inflows during the period. Analysts say the high yields on naira-denominated assets continue to attract short-term foreign investors as market liquidity improves.
By comparison, inflows into equities and foreign direct investment remained subdued. Equity inflows were estimated at $0.01 billion, representing just over one per cent of total inflows, while foreign direct investment stood at $0.03 billion, highlighting the dominance of portfolio flows over long-term capital commitments.
On the supply side, FX inflows were largely driven by exporters, importers, individuals and non-bank corporates, which together contributed about $0.14 billion, or 21.67% of total inflows.
The Central Bank of Nigeria was notably absent from the market, reinforcing the ongoing transition towards a more market-determined exchange rate framework.
Nigeria’s external reserves also provided support for the currency, rising to $46.59 billion as of 2 February, 2026. Analysts at Rhodium Capital Limited noted that the combination of stronger reserves, improved FX supply and recent weakness in the US dollar helped underpin the naira’s gains and enhanced confidence in the market.
They added that the improving performance at the official window has begun to reflect in the parallel market, with both rates gradually moving closer, suggesting better FX availability and a more balanced demand-supply environment.
Looking ahead, analysts expect the naira to remain relatively stable in the near term, supported by sustained portfolio inflows and cautious market management by the central bank as broader reforms in the FX market continue to take shape.
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