The naira recorded its highest appreciation this year at the close of October when it settled at 1,421.73/$ at the Nigerian Foreign Exchange Market, data from the Central Bank of Nigeria has revealed.

The naira traded below the 1,500/$ threshold throughout October at the official market, indicating stability, and appreciated by 3.63 per cent from 1,475.34/$ as of 30 September 2025. In October, the naira traded at its weakest rate of 1,475.35/$ on 17 October 2025.

At the parallel market, the story was not too different, as the domestic currency closed at N1,450.00/$ on Friday, according to CardinalStone.

Providing a weekly review of the FX market, researchers at AIICO Capital attributed the performance of the naira to the activities of foreign portfolio investors.

“The Nigerian naira appreciated during the week, buoyed by improved foreign currency supply from foreign portfolio investors who sold USD positions, boosting market liquidity and easing demand pressures. The steady inflow of foreign funds strengthened supply conditions across key benchmarks, resulting in a consistent appreciation of the naira as USD availability outpaced demand. Overall, the naira gained 2.48 per cent week-on-week to close at N1,421.73/$,” said AIICO Capital.

Meanwhile, Nigeria’s external reserves extended their rally, increasing to $43.17bn as of 30 October 2025, up from $42.35bn recorded a month earlier on 30 September 2025, CBN data indicated.

The data show a monthly gain of $819m, representing a 1.93 per cent growth in reserves within one month. This improvement suggests a steady build-up in foreign assets during the period under review, indicating slightly stronger external buffers compared to the previous month.

Analysts have projected that the currency would maintain an even keel in the coming week and in the near future.

In its macro report, CSL Research identified increased production from Dangote refinery as helping to stabilise the naira despite headwinds.

The macro note said, “A key driver behind this performance has been the resilience of the external sector, even amid relatively weak global oil prices. According to recent data, the current account balance recorded a surplus of about $5.3bn in Q2 2025, up from $2.9bn in Q1 2025.

“We attribute this improvement to a sharp contraction in imports and a modest increase in export receipts. The narrowing of the import bill has helped reduce foreign exchange demand pressures, creating room for the naira to strengthen. We believe that one of the major contributors to this trend is the increase in domestic refined petroleum output, primarily driven by the Dangote refinery.”

Another factor raised was the positioning of global institutional investors with long, unhedged naira-denominated exposures.

“This shift has been driven by growing confidence in the government’s reform agenda and recent positive sovereign credit rating actions. In retrospect, Nigeria has emerged as one of the most attractive destinations for carry trade investors over the past year, as the combination of elevated interest rates and improving exchange rate stability has delivered compelling risk-adjusted returns relative to peers in other emerging markets. We estimate that offshore investors who subscribed to one-year OMO bills in late 2024, when stop rates averaged around 24 per cent and the exchange rate was roughly N1,650/$, would be realising a net return of about 36 per cent in US dollar terms at current exchange rates.

“This profitable carry trade dynamic has reinforced foreign investor interest in Nigerian assets and contributed to stability in the foreign exchange market. Lastly, we add that sustained interventions by the CBN amid increased offshore inflows and stronger trade balances have also helped support the local currency’s performance,” said CSL Research.