Good news for the naira watchers — the currency is flexing again. After a shaky July, the naira has clawed its way back to its best performance in nearly two months.

In a bit of cheery news from the currency markets, the naira closed at N1,360.15 to the dollar at the Nigerian Foreign Exchange Market (NFEM) on Wednesday — its strongest finish since 16 June, according to data published by the Central Bank of Nigeria (CBN) and tracked by cbinews.tv.

That’s a gain of N4.85 from the N1,365/$ recorded on Tuesday, or about 0.36% in a single day. Not massive on paper, but it tells a bigger story.

So, what’s actually happening?

If you’ve been following the FX market closely, this feels like a proper breather after July’s drama.

August has actually been surprisingly stable. The naira opened the month at N1,365/$ on 3 August, nudged to N1,363.11/$ on the 5th, slipped slightly to N1,365.10/$ on the 6th, then firmed up to N1,364/$ on the 7th and N1,361.50/$ on the 10th. After a brief pause at N1,365/$ on Tuesday, Wednesday’s jump to N1,360.15/$ sealed the recovery.

Put it all together, and from N1,368/$ on 31 July, the naira is up N7.85 — roughly 0.57% appreciation in less than two weeks.

And that matters because July was rough. The currency started July at N1,369/$, weakened to N1,379/$ by 7 July, and hit a soft patch of N1,381.50/$ on 17 July — one of its weakest points that month. It clawed back to N1,374.50/$ on 21 July, N1,369/$ on the 22nd, and even N1,361/$ on the 24th, before wobbling again to close July at N1,368/$.

In short, August is undoing July’s damage.

The bigger picture

For context, this gradual recovery is a far cry from where we were just over a year ago.

Remember, after the CBN floated the naira in June 2023 under Governor Yemi Cardoso’s reforms, the currency went through a historic free-fall — tumbling from around N700/$ at the official window to as low as N1,900/$ in February 2024, amid dollar shortages and a backlog of unmet FX demand.

Since then, the CBN has been playing hardball: clearing over $7 billion in FX backlogs, tightening monetary policy with interest rates now at 27.25%, and aggressively mopping up liquidity. Data shows the apex bank withdrew over N11.8 trillion through OMO and Treasury Bills auctions in July and early August alone. It’s painful for borrowing, but it’s helped stabilise the naira and tame inflation.

Turnover is also telling. NFEM turnover fell to $185 million on 11 August — an 11-week low — suggesting thinner trading, but the week ended 7 August saw a whopping $3.73 billion turnover, a 117% surge from the previous week. That kind of swing shows investors are still very much positioning around the naira.

There’s also a global twist. The dollar came under pressure on Thursday after US inflation came in at just 0.1% for July, in line with expectations. Money markets have now cut the odds of a September Fed rate hike to 40% from 54% a week earlier. The dollar index sat flat at 100 on Thursday but is still set for a 0.4% weekly gain.

What you should know

Don’t pop the champagne just yet. The naira’s journey is still bumpy, and analysts at cbinews.tv note that sustainability will depend on whether the CBN can maintain FX supply, keep foreign portfolio inflows coming, and hold its tight policy stance without choking growth.

But for now, the trend is your friend. From the chaos of early 2024 to N1,360/$ in August 2026 — it’s a sign that, slowly but surely, the reforms are starting to stick.

Source: cbinews.tv.

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