Naira Sustains Gains Across Markets on Stronger Inflows, Despite Oil Price Decline

Bullish sentiment prevailed in the FX market last week, as the naira sustained its upward momentum across official and parallel market windows.

Gains were largely supported by a softer U.S. dollar— following weaker than expected U.S. economic data—and stronger foreign exchange inflows, which eased pressure on demand.

At the official window, the naira appreciated by 1.02% w/w, closing at N1,465.68/$ underscoring renewed market confidence.

Similarly, in the parallel market, the naira strengthened by 1.48% to N1,488/$, reflecting the positive spillover from improved liquidity conditions.

External reserves provided additional support, rising 0.21% w/w to $42.35 billion, buoyed by sustained CBN interventions and stronger FX inflows from oil receipts, remittances, and portfolio investments.

Meanwhile, the commodities market was weighed down by bearish trends in crude oil prices. Brent crude and WTI are on track for their steepest monthly decline in four months, pressured by market concerns that OPEC+ may extend its production boost at the October 5 meeting. As at time of writing, Brent crude traded at $64.53/bbl (-8.3% wtd), while WTI stood at $60.86/bbl (-7.6% wtd). Market sentiment remains cautious, as the prospect of an additional 500,000 bpd output increase could further deepen the supply glut.

In tandem with global benchmarks, Nigeria’s Bonny Light crude slipped by 4.66% to $69.94/bbl, raising concerns over potential revenue pressures for the government and broader fiscal implications should oil prices remain subdued in the short to medium term.

Looking ahead, we expect the naira to maintain relative stability across market windows, supported by sustained FX inflows, CBN interventions, and a softer dollar environment. However, downside risks remain from external factors, particularly the ongoing weakness in crude oil prices, which could weigh on external reserves and government revenues if prolonged.