Abuja, Nigeria In a development that presents contrasting signals for Nigeria’s foreign exchange outlook, the Naira depreciated by 0.3% in July, even as the country’s external reserves rose significantly by $2.16 billion, according to data from the Central Bank of Nigeria (CBN).
The naira weakened to an average of ₦1,540.12/$ at the official market, down from ₦1,535.57/$ in June, despite what analysts describe as a strong boost in reserves which climbed from $33.57 billion to $35.73 billion during the same period.
Analysts are describing the development as a “mixed bag” for the economy. While the rise in reserves suggests improved dollar inflow possibly from oil receipts, foreign portfolio investments, or multilateral support the naira’s dip signals persistent pressure in the FX market.
According to financial analyst Tunde Okunola,
“A rise in reserves is positive on paper, but the naira’s continued slide reveals the underlying structural imbalances, such as supply constraints, high demand for dollars, and speculative trading.”
The Central Bank has recently taken several steps to stabilize the currency, including monetary tightening and interventions in the FX market. However, the modest depreciation in July indicates these efforts are yet to fully tame the volatility.
Market watchers say that to sustain the momentum in external reserves and achieve long-term currency stability, the government must focus on boosting non-oil exports, attracting sustainable foreign direct investment (FDI), and ensuring transparency in FX policies.
With inflation still above 28% and investor confidence fragile, the challenge for economic managers remains how to turn reserve growth into real strength for the naira.
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