Naira Rebounds N14.74 as AI Sell-Off Pressures Dollar; Reserves Hit $55.26bn

The naira appreciated against the dollar in the official foreign exchange market on Tuesday, recovering N14.74, or 1.09 percent, after five consecutive days of losses, according to data published by the Central Bank of Nigeria (CBN).

The dollar was quoted at N1,352.87 on Tuesday, compared with N1,367.61 on Monday at the Nigerian Foreign Exchange Market (NFEM). The gain marked the currency's first appreciation since last week, per CBN data.

In the parallel market, the naira steadied at N1,382 per dollar, widening the gap between the official and parallel rates to 2.2 percent, or N30, from 1.09 percent, or N15, on Monday.

Activity moderated in the interbank segment, with total turnover declining by 11.48 percent to $543.74 million on Tuesday from $614.25 million on Monday. The number of deals fell 1.99 percent, from 201 to 197.

Reserves at 18-Year High

Nigeria's external reserves — which provide the CBN capacity to support the naira and meet external obligations — reached an 18-year high of $55.26 billion as of October 26, 2026. Data on the CBN website showed reserves increased by 28.30 percent from $43.07 billion recorded on October 27, 2025, strengthening the country's external buffer amid pressure on the FX market.

A CBN report showed total foreign exchange inflows fell by 4.24 percent to $30.03 billion in the second quarter from $31.36 billion in the first quarter, while outflows declined by 19.17 percent to $8.94 billion from $11.06 billion. FX inflows through the CBN fell by 20.47 percent to $8.12 billion, while inflows through autonomous sources rose by 3.59 percent to $21.91 billion.

Autonomous sources recorded a net inflow of $17.74 billion, compared with $17.53 billion in the first quarter. The CBN's net inflow increased to $3.35 billion from $2.77 billion. Average turnover at the NFEM declined by 7.56 percent to $530.42 million from $573.81 million in the preceding quarter.

The average exchange rate of the naira strengthened to N1,365.95 per dollar in the second quarter from N1,384.48 in the first quarter, a 1.36 percent appreciation.

AI Sell-Off Pressures Dollar

The naira's move comes as the massive unwinding of artificial intelligence stocks on Wall Street reverberates across global currency markets, with the US dollar succumbing to pressure from the tech sector sell-off.

Concerns are growing over the valuations of AI companies and the risk of a sell-off in US equities. Analysts at TD Securities have warned that a sustained decline in American stocks could put pressure on the dollar, particularly if investors begin to expect interest-rate cuts by the Federal Reserve.

A fall in the dollar could offer Nigeria relief from its FX challenges, lowering the cost of imports and easing the naira burden of servicing external debt. But that prospect depends on whether the country can attract enough dollar inflows to take advantage of a shift in global currency markets.

The distinction matters, analysts note: Nigeria's currency problems cannot be explained by the strength of the dollar alone. Oil earnings, foreign investment, import demand and confidence in the domestic FX market will remain important in determining how much relief the country receives.

A weaker dollar could also reduce the cost of imported goods, provided the naira strengthens or becomes more stable. Businesses relying on imported machinery, raw materials, pharmaceuticals, electronics and industrial equipment could see production costs ease, potentially feeding through to consumer prices — though relief would not be immediate, as businesses may still be selling goods purchased at earlier, less favourable rates.

Nigeria's dollar-denominated debt does not automatically shrink when the dollar weakens, but a stronger naira would mean the government needs fewer naira to purchase dollars for debt payments, freeing revenue for other priorities.

The naira had depreciated by N5.77 on Monday, with the dollar quoted at N1,367.61 compared with N1,361.84 on Friday. The last time the naira traded at that level was July 31, 2026, when it exchanged at N1,368.22 per dollar.