Nigeria's currency weakened slightly against the United States dollar on Thursday, June 5, 2026, despite the country's foreign reserves climbing close to their highest level in nearly two decades, highlighting continued pressure in the foreign exchange market.
Naira Depreciates in Official Market
Fresh data released by the Central Bank of Nigeria showed the naira depreciated by 0.11 percent at the Nigeria Foreign Exchange Market (NFEM), closing at ₦1,358.75 per dollar compared to ₦1,357.27 recorded a day earlier. The latest movement reflects ongoing demand pressure for foreign exchange as international payment obligations continued to outweigh FX inflows into the official market.
Official Market Records Lower Turnover
During Thursday's trading session, the naira traded within an intraday range of ₦1,356.75 and ₦1,361.50 per dollar. Interbank FX turnover at the NFEM also declined, with total transactions dropping to $128.12 million across 121 deals, lower than the $133.73 million traded in the previous session. However, the parallel market painted a slightly different picture, with the naira strengthening marginally to ₦1,370 per dollar, underscoring the contrasting dynamics between Nigeria's official and informal currency markets.
Nigeria's Reserves Approach 2009 Peak
Despite the pressure on the naira, Nigeria's external reserves continue to show strong momentum. Analysts tracking the market said the country's gross reserves are now approaching the $50 billion mark, levels not seen since 2009. The improvement has boosted investor confidence in the outlook for the local currency heading into 2026. The Central Bank recently disclosed that Nigeria's net foreign exchange reserves rose to $34.8 billion at the end of 2025, exceeding the country's total gross reserves before the FX reforms introduced by the current administration. Investment analysts now project that Nigeria's net FX position could climb toward $40 billion this year, supported largely by increased crude oil earnings and improved foreign exchange inflows.
CBN Policies Drive Reserve Growth
Financial experts attributed the sharp improvement in reserves to a combination of policy reforms introduced by the Central Bank of Nigeria. A major factor behind the recovery was the reduction in FX swap and forward obligations, which previously weighed heavily on the country's reserve position. The market also expects Nigeria's reserves to strengthen further if elevated global oil prices continue to support stronger export earnings from crude sales.
Oil Prices Retreat Amid Middle East Tensions
Meanwhile, global oil prices fell sharply on Thursday after reports suggested the United States was reluctant to escalate military tensions involving Iran. Brent crude, the international oil benchmark, dropped more than 3 percent to $94.78 per barrel, while West Texas Intermediate futures declined 3.5 percent to $92.64. According to reports from U.S. media outlets, President Donald Trump told aides that a temporary ceasefire involving Iran appeared to be holding despite isolated clashes in the region. The development eased fears of an immediate supply disruption in global oil markets, contributing to the decline in crude prices. Analysts say movements in oil prices remain critical for Nigeria's economy, as crude exports continue to serve as the country's largest source of foreign exchange earnings and external reserve growth.
CBN Explains Naira Exchange Rate Performance
Legit.ng earlier reported that the CBN says the naira is not artificially propped up, stressing that the stability witnessed recently is market-driven following reforms and increased liquidity. This was revealed by Governor Olayemi Cardoso while briefing journalists in Abuja after the Monetary Policy Committee (MPC) meeting. He pointed out that after the past two years' reforms of the foreign exchange market, the market had become much more transparent and market-driven.
For over a decade, Pascal Oparada has reported on tech, energy, stocks, investment, and the economy. He has worked in many media organizations such as Daily Independent, TheNiche newspaper, and the Nigerian Xpress. He is a 2018 PwC Media Excellence Award winner.
