Naira Gains 2% As NFEM Turnover Hits $2.63bn In Five Sessions

By Kingsley Ani

The naira strengthened by 2.04 percent against the US dollar between August 24 and September 4, even as trading activity in the Nigerian Foreign Exchange Market remained substantial, reinforcing recent signs of improved stability in the official FX market.

DEVELOPMENT:
The naira closed at N1,322.50/$ on September 4, compared with N1,349.99/$ on August 24, representing an appreciation of N27.49.

The strengthening occurred alongside $2.63 billion in NFEM turnover across five trading sessions between August 31 and September 4. This followed $3.19 billion traded in the preceding four sessions.

The exchange rate also strengthened progressively during the latest period, moving from N1,335.50/$ on August 31 to N1,329/$ on September 1, N1,324.50/$ on September 2 and N1,322.50/$ on both September 3 and 4.

The movement is notable because the naira gained ground while the market continued to process sizeable dollar transactions, suggesting that increased market activity was not accompanied by equivalent pressure on the currency.

NUMBERS:
NFEM recorded $2.63 billion in turnover over five sessions, equivalent to average daily turnover of $526.30 million.

The weighted average exchange rate improved to N1,325.19/$, from N1,341.61/$ in the preceding four-session period.

The market recorded 1,580 deals, up from 1,554 deals previously.

Interbank transactions accounted for $605.68 million of turnover.

Daily NFEM turnover rose from $228.52 million on August 31 to $574.42 million on September 1, $658.46 million on September 2 and $674.38 million on September 3, before moderating to $495.70 million on September 4.

SIGNIFICANCE:
For investors and businesses, the combination of currency appreciation and substantial FX turnover is more significant than the naira’s nominal 2 percent gain on its own.

A stronger naira alongside deep market activity points to improved liquidity conditions in the official market. If sustained, greater exchange-rate stability could improve visibility for importers, manufacturers, investors and businesses with significant foreign-currency exposure.

The increase in deal count also suggests that the improvement was occurring within an actively traded market rather than a thin market where a small number of transactions could disproportionately influence the exchange rate.

NEXT MOVE:
The immediate question is whether the naira can sustain its gains as dollar demand and supply evolve through September.

Investors should watch NFEM turnover, interbank activity, the weighted average exchange rate and the spread between official and other market rates.

The key signal will be whether higher FX liquidity continues to coincide with a stable or strengthening naira, rather than a reversal once transaction volumes normalise.

OUR LENS:
The deeper signal from the latest data is stability under volume.

Currency appreciation is not unusual in isolation. What is more consequential is that the naira strengthened while NFEM processed more than half a billion dollars a day on average and recorded 1,580 transactions.

That combination suggests the recent improvement is increasingly being tested under meaningful market activity. The next phase, however, is about durability. A stable naira supported by sustained liquidity would represent a stronger improvement in market conditions than a short-lived appreciation driven by temporary flows.

For the official FX market, therefore, the important metric is becoming less about the daily naira-dollar print and more about whether liquidity, price discovery and currency stability can continue to reinforce one another.

Kingsley Ani is a journalist who has over the years been covering capital, markets, corporate results, economic and public-interest developments with a focus on clear, factual reporting.