Lagos, Nigeria (VOICE OF NAIJA)- NIGERIA’s official foreign exchange market recorded a sharp improvement in liquidity during the first half of 2026, with daily turnover frequently exceeding $500 million, several trading sessions approaching or surpassing $1 billion, and a record $1.82 billion traded in a single day.
The surge in activity has deepened the market, improved price discovery and strengthened the naira’s ability to absorb demand pressures, reinforcing confidence that the Central Bank of Nigeria’s (CBN) foreign exchange reforms are beginning to deliver lasting results.
An analysis of Central Bank of Nigeria (CBN) data shows the naira appreciated from ₦1,431/$ at the beginning of the year to ₦1,376/$ on June 30, representing a gain of ₦55, or 3.8 per cent, over the six-month period.
While the appreciation drew attention, analysts say the more significant development was the sustained rise in official market turnover, which points to stronger liquidity, broader market participation and improving investor confidence.
Available data from the Nigerian Foreign Exchange Market (NFEM) show that more than $31 billion worth of foreign exchange was traded between March and June, marking a substantial increase in market depth.
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Unlike previous years, when liquidity depended heavily on periodic CBN interventions, turnover remained consistently strong throughout the second quarter, with daily transactions commonly ranging between $500 million and $1 billion.
The busiest trading sessions during the period included:
Date Daily turnover
May 12 $1.82 billion (highest under the NFEM framework)
March 10 $1.14 billion
March 13 $1.13 billion
June 30 $1.07 billion
June 15 $985.6 million
March 23 $984.1 million
April 8 $966.4 million
June 25 $923.6 million
June 29 $910.8 million
Market analysts said the consistency of the high turnover is more important than individual spikes because it reflects broader participation by buyers and sellers, leading to better price discovery and a more efficient market.
Although complete turnover figures for January and February were unavailable, trading activity accelerated sharply from March. March recorded three sessions with turnover above $980 million, while April maintained strong liquidity, peaking at $966.4 million on April 8.
May emerged as the strongest month of the first half after recording the $1.82 billion milestone on May 12, while June sustained the momentum with four trading sessions above $900 million, suggesting that stronger liquidity has become increasingly structural rather than event-driven.
The interbank foreign exchange market also expanded during the period, with daily turnover generally ranging between $70 million and $250 million. One of the strongest sessions occurred on April 29, when interbank transactions approached $250 million, while several June sessions exceeded $170 million.
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Trading activity also became more diversified. Several sessions recorded more than 350 individual deals, while April 8 saw 515 transactions, indicating broader market participation and reducing the influence of large individual trades on exchange-rate movements.
After strengthening to around ₦1,340/$ in February, the naira weakened briefly in March before trading within a relatively narrow range of ₦1,356/$ to ₦1,389/$ for much of the second quarter.
Analysts attributed the reduced volatility to improved market liquidity.
According to Muftau Yusuf, the increase in turnover reflects stronger foreign exchange supply rather than greater dependence on CBN intervention.
“The improvement in FX liquidity reflects a broader supply base rather than heavy reliance on CBN interventions. Higher yields on Nigerian fixed-income securities have continued to attract foreign portfolio investors, while stronger inflows from oil and gas exporters, non-oil exporters, international oil companies repatriating export proceeds, diaspora remittances and increased intermediation by commercial banks have all contributed to improving liquidity.”
He said sustaining those inflows would be essential to maintaining exchange-rate stability in the second half of the year.
Despite the improved liquidity, foreign direct investment remained subdued. According to data from the National Bureau of Statistics, FDI fell to $135.08 million in the first quarter of 2026 from $357.80 million in the preceding quarter.
Yusuf said the first-half performance suggests the CBN’s reforms are gradually making the foreign exchange market more efficient and increasingly driven by market forces.
Forex analyst Maruf Babafemi cautioned that higher turnover alone would not guarantee continued appreciation of the naira, noting that crude oil production, capital inflows and the level of external reserves would remain key determinants of the currency’s direction.
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Similarly, economist Femi Ojelabi described the increase in turnover as one of the clearest indicators that confidence is returning to Nigeria’s official foreign exchange market.
“Deeper liquidity enhances price discovery, reduces opportunities for speculation and makes the market more resilient.”
Nigeria’s external reserves recently climbed above $51 billion—their highest level since 2009—after rising by more than $1 billion during the first half of June, supported by stronger foreign exchange inflows.
With turnover approaching a $1 billion daily average, improving market participation and rising reserves, analysts say Nigeria’s official foreign exchange market is becoming deeper, more transparent and increasingly resilient, providing a stronger foundation for exchange-rate stability in the months ahead.
