Naira Firms Across Markets

• as Oil Prices Wobble on Supply Hints

Oil prices slipped slightly in today’s trading, with Brent crude easing to $68.58 per barrel following signals from OPEC+ of a potential output increase. Market sentiment was briefly rattled midweek after Iran temporarily suspended cooperation with UN nuclear inspectors, sparking a $2 surge in prices.

However, the tension quickly cooled as Iran reaffirmed its commitment to the nuclear treaty. WTI crude eventually settled near $67 per barrel, though traders remain cautious amid persistent geopolitical uncertainty and evolving supply dynamics.

Meanwhile, Nigeria’s naira is showing signs of resilience across both official and parallel markets.

As of July 4, 2025, the official exchange rate appreciated by 0.65% week-on-week to N1,529 per dollar, while the parallel market rate gained 2.29% to close at N1,530 per dollar.

The recent strength in the local currency reflects a combination of rising FX inflows, Central Bank reforms, and targeted interventions aimed at improving dollar supply and narrowing the gap between market rates.

Looking ahead, we expect the naira to maintain its upward momentum, supported by a softer dollar on the global stage—driven by rising oil prices and the escalating tensions in the Middle East.

With Nigeria’s external reserves gradually strengthening and policy signals turning more market friendly, confidence in the local currency is steadily improving.

MONEY MARKET:

Liquidity Cushions Fall Short as Rates Hold Firm across Market in the money market, monetary conditions remained tight in the just concluded week despite a moderate boost in liquidity.

The system closed the week with a net surplus balance of just over N400 billion, thanks in part to N150 billion in Open Market Operation (OMO) maturities.

Yet, that injection did little to loosen the grip of short-term funding pressures, as financial institutions continued to scramble for liquidity amid strong demand for overnight and short-dated instruments.

The Overnight Nigerian Interbank Offered Rate (NIBOR) edged up by 11 basis points to settle at 26.82%, compared to 26.71% last week. Tighter conditions also filtered through to longer tenors, with the 1-month, 3-month, and 6-month NIBOR climbing to 27.25%, 27.71%, and 28.33%, respectively.

These mark increases of 33bps, 46bps, and 75bps over the week, reflecting the ongoing funding pressure in the interbank space.

The Open Buy Back (OPR) and Overnight (O/N) lending rates — key barometers of short-term funding cost — also ticked higher, closing at 26.83% and 27.42%, respectively, up from 26.50% and 26.99% the previous week.

Despite the modest liquidity surplus in the sys- tem, banks remained cautious, preferring to hold onto cash rather than de- ploy into the market aggressively