By Kehinde Ibrahim, Lagos
ACTIVITIES in Nigeria’s foreign exchange market recorded a significant rebound in June 2026, with total turnover in the Nigerian Foreign Exchange Market, NFEM, climbing by 44 per cent month-on-month to approximately $12.92 billion, reflecting stronger dollar liquidity, increased participation by market players and growing confidence in the country’s foreign exchange reforms.
Trading data indicated that total turnover rose from about $8.99 billion recorded in May to $12.92 billion in June, representing a 43.6 percent increase. The sharp improvement underscores the gradual recovery in market activity as liquidity conditions strengthened while the Central Bank of Nigeria, CBN, sustained efforts aimed at improving transparency and efficiency in the foreign exchange market.
The improved performance comes as the CBN continues to implement policies designed to deepen liquidity, enhance price discovery and encourage greater participation by authorised dealers within the official foreign exchange market. The reforms have increasingly supported smoother trading conditions and reduced distortions in the market, contributing to higher transaction volumes.
Trading activity remained consistently strong throughout June, with several sessions recording exceptionally high turnover. Market data showed that daily foreign exchange transactions exceeded $900 million on multiple occasions, while the highest daily turnover reached approximately $1.07 billion. Another trading session recorded volumes of more than $980 million, highlighting sustained demand and improved market depth.
Although May witnessed a higher single-day turnover of approximately $1.82 billion and another session close to $994 million, overall market activity during that month was considerably weaker and more volatile. By contrast, June recorded more consistent trading patterns, with daily turnover remaining above $500 million on most trading days, signalling healthier liquidity conditions across the market.
Analysts at Financial Markets Dealers Association, FMDA, attributed the stronger market performance largely to timely interventions by the Central Bank of Nigeria, which helped moderate the impact of heightened foreign exchange demand following the maturity of private Open Market Operations, OMO, bills.
According to the analysts, the CBN’s measured intervention strategy ensured that liquidity remained adequate despite increased demand pressures, thereby preventing excessive volatility in the foreign exchange market.
The improved market environment was further supported by a steady rise in Nigeria’s external reserves. Official figures showed that the country’s gross external reserves increased by 3.3 per cent during the month, rising by approximately $1.66 billion from $49.8 billion at the beginning of June to $51.46 billion by month-end.
The growth in reserves, coupled with stronger offshore foreign exchange inflows and a $170 million intervention sale by the CBN, contributed to improved market confidence and strengthened the naira during the review period.
As a result, the local currency appreciated by 0.9 per cent against the United States dollar, closing the month at N1,370.19 per dollar in the official market.
The naira also posted gains across most segments of the forward foreign exchange market. The one-month forward contract appreciated by 0.5 per cent to N1,393.36 per dollar, while the three-month and six-month forward rates strengthened by 0.4 per cent and 0.2 per cent to N1,432.16 and N1,488.67 per dollar respectively.
However, the longer-dated one-year forward contract weakened marginally by 0.2 per cent to close at N1,601.20 per dollar, suggesting that some investors remain cautious about longer-term exchange rate expectations despite the recent improvements in market conditions.
Looking ahead, analysts at Cordros Research expect the naira to remain broadly stable over the near term, supported by resilient foreign portfolio investment inflows, sustained investor confidence and an improving current account position.
They noted that continued reforms in the foreign exchange market and the CBN’s commitment to maintaining orderly market conditions should provide additional support for exchange rate stability.
Nevertheless, the analysts cautioned that external geopolitical risks remain significant. In particular, they warned that any deterioration in the ceasefire between the United States and Iran could trigger renewed volatility in global financial markets, leading to portfolio outflows from emerging markets, including Nigeria.
Such developments, they said, could compel the CBN to undertake additional foreign exchange interventions to minimise excessive fluctuations in the value of the naira.
Similarly, analysts at Cowry Assets Management projected that the local currency would maintain relative stability in the coming months, supported by improving market liquidity, stronger external reserves and sustained policy measures by the monetary authorities.
However, they observed that developments in the global oil market remain an important risk factor for Nigeria’s external sector. According to the analysts, crude oil prices could continue to experience volatility amid evolving geopolitical tensions, changing global demand conditions and production decisions by the Organisation of the Petroleum Exporting Countries and its allies, OPEC.
Meanwhile, the international oil market remained under pressure during the period, extending losses for a fourth consecutive week as easing geopolitical tensions and improved global supply weighed on prices. West Texas Intermediate crude slipped 0.10 per cent to $68.62 per barrel, while Brent crude edged up marginally by 0.17 per cent to $71.92 per barrel. Nigeria’s Bonny Light crude also declined by 0.26 per cent week-on-week to settle at $71.63 per barrel.
