- The Nigerian currency has continued to hold strong against the US dollar in the official and parallel markets
- On Monday, September 29, 2025, the local currency closed at N1,476.35 per dollar as investors dumped dollar assets
- Experts have predicted a long-term rally for the naira, saying the gains will extend to the end of this year
Pascal Oparada, a reporter for Legit.ng, has over ten years of experience covering technology, energy, stocks, investment, and the economy.
The Nigerian naira extended its winning streak on Monday, appreciating by 0.29 per cent to close at ₦1,476.35 per dollar at the official foreign exchange window.
The rally, which has persisted across both the official and parallel markets, reflects growing investor confidence, improved liquidity, and fresh inflows from oil and export companies.
The naira remains robust in all markets against the USD amid CBN’s intervention
Credit: Picture Alliance/Contributor
Source: Getty Images
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Traders attributed the currency’s gains to subdued demand for the US dollar, coupled with strong market sentiment fueled by accretion in the country’s foreign reserves.
Investors exit dollar assets
Market analysts revealed that some investors holding short-term structured dollar assets have begun winding down their positions to avoid potential losses.
With the naira appreciating steadily, risk-averse investors are reportedly selling off dollar holdings in anticipation of further local currency gains.
“Most of the dollar funds that were to cater for short-term positions have been wound down,” a source at a leading investment banking firm told MarketForces Africa.
The strategy, analysts suggest, is anchored on expectations of continued positive exchange rate movements and stronger dollar supply.
CBN’s role in stabilising FX
The Central Bank of Nigeria (CBN) has played a critical role in restoring confidence to the FX market. By adjusting exchange rates and supporting liquidity, the apex bank has created an environment where speculative demand for dollars has been dampened.
Updated figures from the CBN showed that the spot exchange rate on Monday, September 29, 2025, touched an intraday low of ₦1,475 per dollar, while the highest rate quoted was ₦1,486.50.
The tighter spread, analysts say, reflects improved market efficiency.
External reserves on the rise
Adding to the positive momentum is Nigeria’s external reserves, which climbed to $42.256 billion on Friday, up from $42.225 billion the previous day. The steady increase signals stronger dollar inflows into the economy, further boosting confidence in the naira.
Analysts believe that if reserves continue to grow, the CBN will be in a stronger position to defend the naira in the medium term, particularly against external shocks.
Parallel market mirrors official gains
In the parallel market, the naira also appreciated, gaining 0.83% to close at ₦1,499 per dollar.
The convergence of the official and parallel market rates underscores the effectiveness of recent FX reforms and policies aimed at narrowing the wide gap that has historically encouraged arbitrage.
FX traders say confidence is gradually returning to the market as dollar supply improves and speculative trading subsides. The consistency of gains across both market segments suggests a more sustainable rally.
Outlook: Sustained gains or temporary relief?
While optimism is growing, analysts caution that the sustainability of the naira’s rally will depend on continued inflows from oil exports, steady foreign investment, and the CBN’s ability to maintain policy consistency. Any reversal in these fundamentals could trigger fresh volatility.
CBN injects more forex into the forex market amid a strong naira rally.
Credit: NurPhoto/Contributor
Source: Getty Images
For now, however, the naira’s outlook remains positive, with traders and investors increasingly confident that the local currency is on a path of recovery.
Janet Ogochukwu, senior banker and economist, predicted that the naira’s gains will last way into December.
“Nigeria’s external reserves are very robust at the moment,” she said. “So the gains will last until December as CBN continues to support the FX market by injecting forex.”
CBN sells $70 million to authorised dealers
Legit.ng earlier reported that the CBN has once again flexed its financial muscle, injecting $70 million into the foreign exchange (FX) market through commercial banks.
The intervention, which comes at a crucial time, has helped the naira strengthen against the US dollar and other major currencies, restoring some level of market confidence.
In recent months, the naira has been on a rollercoaster ride, weighed down by demand pressure and speculative trading.
Source: Legit.ng
