The naira depreciated by 0.15% against the US dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, October 19, closing at N1,333.76 per dollar, down from N1,331.76 in the previous session. This represents a loss of N2 or 0.15% for the local currency. Meanwhile, Deutsche Bank added Nigeria to its frontier foreign exchange monitor, describing the naira as undervalued and possessing room for further appreciation.
Official Market Performance and Turnover Decline
According to data from the Central Bank of Nigeria (CBN), interbank foreign exchange turnover fell sharply by 84.1% to $40.975 million, compared with $258.426 million recorded in the preceding session. The number of deals also dropped to 59 from 135, indicating a significant slowdown in market activity.
The naira also weakened against other major currencies. Against the pound sterling, it fell by N15.85 to N1,778.30, while against the euro it shed N6.77 to close at N1,497.41. Other official selling rates reported on Monday included: Swiss franc at N1,617.66, SDR at N1,807.11, WAUA at N1,806.48, UAE dirham at N363.13, South African rand at N81.17, Saudi riyal at N355.42, Chinese yuan/renminbi at N199.64, Danish krone at N200.30, CFA franc at N2.28, and Japanese yen at N8.42.
Parallel Market Steady, Analysts Eye FX Inflows
At the parallel market, also known as the black market, the naira held firm at N1,358 per dollar, unchanged from the previous session. It also remained steady at N1,340 per dollar at the GTBank foreign exchange desk.
Analysts suggest that the short-term direction of foreign exchange inflows will depend on sustained foreign portfolio investment and a recovery in domestic sources of dollar supply. The sharp decline in interbank turnover and the reduced number of deals point to lower trading activity, which could influence market dynamics in the coming sessions.
Deutsche Bank Sees Upside for Naira
Despite Monday's dip, Deutsche Bank said the naira has room to appreciate further. The international lender added Nigeria to its frontier foreign exchange monitor, describing the naira as undervalued and offering attractive carry, meaning investors can earn relatively strong returns simply by holding the currency given Nigeria's high interest rate environment.
In a note issued on Monday, October 19, the bank's strategists and economists pointed to favourable inflation-adjusted interest rates as a key factor supporting the naira's appeal to investors. They also noted that the naira had risen by nearly 8% against the dollar so far in 2026, placing it among the top 10 best-performing currencies out of 144 tracked by Bloomberg. The bank said the outlook for further gains will depend on the sustainability of foreign exchange inflows, foreign investor participation, and domestic dollar supply.
The Securities and Exchange Commission (SEC) is also planning stricter regulations for online forex and contracts for differences (CFDs) providers serving retail investors. The proposed rules would set minimum paid-up capital requirements based on the type of business operated by each company, and would require brokers to keep customers' funds separate from their own.
