Naira gains value as foreign reserves dip despite oil price rise

DDM News

The Nigerian naira appreciated further on Monday, closing at ₦1,544.62 per US dollar at the Nigerian Foreign Exchange Market (NFEM), marking a 0.3% gain from Friday’s rate of ₦1,549.35.

Diaspora Digital Media (DDM) reports that despite the rebound in global oil prices, Nigeria’s external reserves slipped slightly to $37.93 billion as of June 13, 2025, down from $38.02 billion on June 11, according to Central Bank of Nigeria (CBN) data.

The rise in oil prices was driven by Brent crude’s sharp 11.67% increase last week—its largest weekly gain in years—closing at $74.23 per barrel.

This surge reduced Brent’s year-to-date loss to -0.55%, compared to -10.95% the previous week.

The 2025 average Brent price now stands at $75.08 per barrel, about 5.98% below the 2024 average of $79.86.

Bonny Light crude also surged by 12.86%, trading at $77.73 per barrel, maintaining a $3.50 premium over Brent.

This recovery brings oil prices closer to Nigeria’s 2025 budget benchmark of $75 per barrel.

According to Coronation Research, the naira gained ₦3.76 (or 0.24% week-on-week) at the NFEM, driven mainly by foreign portfolio investor (FPI) inflows.

These inflows pushed the naira to a midweek high of ₦1,539.72 per dollar, though it weakened slightly towards week’s end.

The Central Bank revealed it injected about $580 million into the market in May to stabilize the naira alongside other FX inflows.

However, in the parallel market, the naira depreciated by 0.94%, closing at ₦1,600 per dollar.

Foreign portfolio investors remained the primary source of FX inflows for the fourth week in a row, reinforcing investor confidence in Nigeria’s economic outlook.

This was further supported by the CBN’s Monetary Policy Committee (MPC) meeting on May 19 and 20, which retained the Monetary Policy Rate (MPR), and by Nigeria’s credit rating upgrade in April.

Breakdown of FX inflows showed non-bank corporates contributed 37.36%, exporters 23.08%, while other sources accounted for 0.57%.

There were no direct FX injections from the CBN during the week, likely due to reduced pressure on the exchange rate and the broader weakening of the US dollar amid concerns over American debt sustainability.

As of Wednesday, CBN’s gross external reserves had declined by $256.73 million or 0.67% week-on-week.

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