The naira appreciated by N8.07 against the US dollar on Monday, August 17, 2026, reaching N1,349.54 at the Nigerian Foreign Exchange Market (NFEM), its strongest level since April 22, 2026. The gain, which represents a 0.59 per cent increase, followed the Central Bank of Nigeria's (CBN) removal of restrictions that had barred banks from accessing its Standing Lending Facility (SLF) after participating in foreign exchange transactions and primary auctions of government securities.
Policy Shift and Market Reaction
The CBN's policy adjustment, which took effect ahead of Monday's trading, is expected to improve banks' access to liquidity and strengthen the transmission of monetary policy across the financial system. The dollar quoted at N1,349.54 compared with N1,357.61 on Friday, marking a significant shift in the official market.
According to Legit.ng, the latest exchange rate is the strongest recorded since April 22, 2026, when the dollar traded at N1,348.45. The policy change removes previous restrictions that had limited banks' use of the discount window, a move analysts say could enhance market stability.
FX Turnover Surges 266 Per Cent
Trading activity in the interbank FX market surged sharply on Monday, with the number of deals rising by 29.93 per cent to 178 from 137 on Friday. Total turnover jumped 265.86 per cent to $437.53 million, the highest single-day volume since July 22, 2026, and a significant increase from the $119.59 million recorded on Friday.
At the parallel market, the naira also strengthened to N1,410 per dollar from N1,420 last week. This narrowed the gap between the official and parallel market rates to 4.48 per cent on Monday, down from 4.64 per cent on Friday, indicating a closer alignment between the two markets.
External Reserves at 17-Year High
The naira's gains come against a backdrop of stronger external reserves, which provide the CBN with additional capacity to manage foreign exchange liquidity. Nigeria's external reserves rose to $52.25 billion as of August 13, 2026, their highest level in 17 years, according to a report by BusinessDay cited by Legit.ng.
The figure represents a 28.32 per cent increase from the $40.72 billion recorded in the corresponding period of 2025. The sustained rise in reserves, alongside improved FX market liquidity, has provided a stronger backdrop for the naira after months of volatility.
Implications for the Economy
The combination of higher FX turnover, rising reserves, and easier access to the CBN's liquidity facility points to a changing landscape for Nigeria's foreign exchange market. For businesses and consumers, a more stable naira could ease pressure on the cost of imported goods and services if the trend is sustained.
However, the durability of the naira's recent gains will depend on continued FX liquidity, reserve accumulation, market confidence, and the CBN's ability to maintain orderly conditions in the currency market. The CBN's earlier interventions in March 2026, which included selling $953.41 million to the market, the strongest central bank FX activity since April 2025, underscore its active role in managing the currency.
