Naira Hits Strongest Level of 2025, Appreciates to ₦1,421/$ as Foreign Inflows Boost Liquidity

The naira recorded its strongest performance of 2025 in October, closing the month at ₦1,421.73 per dollar at the Nigerian Foreign Exchange Market, according to data released by the Central Bank of Nigeria (CBN).

Throughout October, the local currency traded below the ₦1,500/$ mark, reflecting improved stability and a 3.63 per cent appreciation from the ₦1,475.34/$ rate recorded on September 30, 2025. The weakest level during the month was ₦1,475.35/$ on October 17.

At the parallel market, the trend was similar, with the naira closing at ₦1,450/$ on Friday, data from CardinalStone showed.

Analysts at AIICO Capital attributed the naira’s steady appreciation to increased foreign portfolio inflows, which boosted dollar liquidity in the market.

“The naira appreciated during the week, supported by improved foreign currency supply from foreign portfolio investors who sold USD holdings, enhancing market liquidity and reducing demand pressure,” AIICO Capital said in its weekly FX report. “Overall, the naira gained 2.48 per cent week-on-week to close at ₦1,421.73/$.”

Meanwhile, Nigeria’s external reserves continued to rise, climbing to $43.17 billion as of October 30, 2025, up from $42.35 billion a month earlier — a $819 million (1.93%) increase within one month, according to CBN data. The growth signals stronger external buffers and a gradual recovery in foreign assets.

Research by CSL noted that the local currency’s resilience was partly supported by improved domestic petroleum output from the Dangote Refinery, which has helped reduce import dependence and foreign exchange demand.

“A key driver behind this performance is the resilience of the external sector,” CSL Research stated. “The current account surplus rose to $5.3 billion in Q2 2025, up from $2.9 billion in Q1, due to lower imports and modest growth in export receipts. Increased domestic refining has significantly eased FX pressures.”

The report also highlighted renewed confidence among global institutional investors in Nigeria’s reform agenda and improved credit ratings, making naira-denominated assets more attractive for carry trade investors.

“Nigeria has become one of the most appealing destinations for carry trade investors,” CSL added. “Those who subscribed to one-year OMO bills in late 2024, when stop rates averaged 24% and the exchange rate was around ₦1,650/$, are now realizing returns of about 36% in dollar terms.”

Analysts concluded that the combination of foreign inflows, tighter monetary policy, and CBN interventions has strengthened naira stability and could sustain the positive momentum in the coming weeks.