The naira strengthened to its highest level in 10 months last week, buoyed by strong foreign exchange inflows from portfolio investors and remittances, according to data from the Central Bank of Nigeria (CBN).
At the official market, the local currency appreciated by 0.72 per cent (₦10.5) to close at ₦1,455.17 per dollar, its strongest performance since December 2024. Similarly, at the parallel market, the naira gained 0.88 per cent to close at ₦1,475 per dollar, supported by improved liquidity and steady inflows.
Market analysts attributed the naira’s performance to increased foreign portfolio investments (FPIs), diaspora remittances, and a gradual recovery in external reserves.
“The naira is likely to remain stable in the near term, supported by improved U.S. dollar supply and external reserves,” said AIICO Capital in its weekly market outlook.The FX market opened the week on a bearish note, pressured by early FPI outflows, but sentiment improved midweek as fresh dollar inflows entered the system. According to traders, many foreign investors sourced naira to meet local fixed-income obligations, helping to stabilise demand.
Cowry Asset Management Limited noted that the improvement in naira value was driven by better FX inflows, which eased pressure on the market.
“We expect the naira to stay stable in the near term, supported by steady inflows and CBN interventions,” the firm said. “However, rising import demand or weaker inflows could slow further gains.”Nigeria’s external reserves rose to $42.57 billion, reflecting higher proceeds from oil sales, remittances, and portfolio investments. Analysts say this rise gives the CBN more room to cushion short-term currency pressures and sustain naira stability.
Adding to market optimism, FTSE Russell, a leading global index provider, announced that Nigeria has been placed on its Watch List for possible reclassification from “Unclassified” to “Frontier Market” status in its September 2025 Semi-Annual Review.
FTSE Russell explained that Nigeria now meets the five “Quality of Markets” criteria required for a Frontier Market upgrade, following improvements in FX liquidity and transaction transparency. The country was downgraded to “Unclassified” in 2023 due to severe delays in foreign investors’ capital repatriation.
If upgraded, Nigeria could attract renewed interest from global institutional investors.
Meristem Securities noted that the FTSE Watch List inclusion “repositions Nigeria on the investment radar” for global funds.
“This development is expected to trigger pre-positioning by active funds and future allocations by passive funds,” Meristem said. “The result could be significant inflows of foreign portfolio investment over the next year, boosting dollar supply and FX stability.”Analysts, however, cautioned that Nigeria’s long-term currency stability will depend on sustained policy consistency, market transparency, and the government’s commitment to maintaining a market-driven FX system throughout the observation period, which runs until March 2026.