Nigeria’s Foreign Exchange Market Sees Significant Uptick in April 2026
In April 2026, the Nigerian foreign exchange market experienced a marked increase in trading activity, with total turnover reaching $8.51 billion. This surge highlights the market’s resilience amid persistent global economic pressures.
Appreciation of the Naira Amid Ongoing Pressures
The naira demonstrated a notable appreciation in both official and parallel markets, despite the backdrop of sustained global challenges. The Financial Market Dealers Association (FMDA) reported that the naira concluded the month at 1,361.22 naira per dollar in the official market and 1,403.60 naira in the parallel market. This represented increases of 1.36% and 1.18%, respectively, compared to the previous month.
Anticipated Liquidity Boost from Maturing Securities
The FMDA’s monthly market report indicated that approximately N1.6 trillion is expected to flow into the financial system this week from maturing securities. This influx is likely to enhance liquidity in the money market, even as the Central Bank of Nigeria (CBN) continues its liquidity management operations.
Capital Inflows Primarily from Open Market Operations
Looking ahead, the report suggests that capital inflows will be largely driven by open market operations (OMO) maturities, which are predicted to constitute around 89% of the anticipated liquidity boost. This indicates a strategic focus on managing liquidity amidst tightening measures from monetary authorities.
CBN’s Continuous Liquidity Management Efforts
The improvement in the foreign exchange market comes in light of the CBN’s ongoing efforts in liquidity management. The apex bank has been actively engaged in open market operations to mitigate excess liquidity, affecting average system liquidity which saw a month-on-month decrease of 25.22% to NEB 4.84 trillion in April.
Stable Interest Rates Despite Tight Liquidity Conditions
Despite a constrained liquidity environment, interbank interest rates have remained relatively stable. The Nigerian Overnight Funding Rate (NOFR) was recorded at 22.05%, and the Open Repurchase Rate (OPR) stood at 22.00%. These rates reflect a sustained balance even as monetary tightening continues to influence market dynamics.
Projected Increase in Financial Inflows for May
The FMDA has forecasted further growth in financial inflows for May, estimating total inflows to reach N10.53 trillion—an approximate 16% increase from April. OMO maturities are expected to contribute significantly, accounting for about 68% of these inflows, with N7.17 trillion maturing in May compared to N5.88 trillion in April. Additionally, Treasury bills maturing during this period are expected to total N1.05 trillion.
Potential for Ongoing Liquidity Sterilization by the CBN
While optimistic projections for influxes into the financial system persist, analysts caution that the CBN may continue to sterilize liquidity through additional market operations. As the financial landscape unfolds, ongoing monitoring of these dynamics will be essential for stakeholders navigating Nigeria’s evolving economic environment.
