Reported by Weng Patrick Atokor | journalist at Weng Global
Nigeria’s foreign exchange market recorded a sharp recovery in trading activity on August 17, 2026, with turnover on the Nigerian Autonomous Foreign Exchange Market (NAFEM) rising to $1.41 billion, its highest level in five weeks.
The latest figure represents a significant rebound from the unusually weak activity recorded earlier in August and signals renewed participation in Nigeria’s official foreign exchange market.
According to data from the Central Bank of Nigeria (CBN), the $1.41 billion turnover was more than seven times the $185 million recorded on August 11, when NAFEM activity fell to an 11-week low.
The August 17 figure was also the highest daily turnover recorded since July 21, when the market posted approximately $1.53 billion in transactions.
FX activity rebounds
The sharp improvement came after several days of subdued trading.
NAFEM turnover stood at $607.47 million on August 12 before falling to $387.09 million on August 13 and $352.34 million on August 14. The subsequent jump to $1.41 billion therefore represented a substantial increase in market activity.
The market recorded 394 deals during the August 17 session, including 178 interbank transactions, highlighting increased participation among market players.
The recovery is significant because trading volume is an important indicator of liquidity in the foreign exchange market. Higher turnover can provide greater opportunities for buyers and sellers to transact and may contribute to more efficient price discovery.
However, analysts caution that one strong trading session should not automatically be interpreted as evidence of a sustained improvement in market liquidity.
An emerging-markets expert cited by The Punch noted that large transactions can materially influence daily turnover, meaning the market would need to record stronger volumes consistently over several sessions before a durable improvement in liquidity can be confirmed.
Naira strengthens
The increase in FX activity was accompanied by an appreciation of the naira at the official market.
The naira closed at N1,350 per dollar on August 17, strengthening from N1,358.25/$ in the previous session.
That represented an appreciation of N8.25 against the dollar.
The weighted average exchange rate was N1,349.54/$, while the simple average stood at N1,350.98/$.
The August 17 closing rate was also stronger than the N1,365/$ recorded on August 11, the same day NAFEM turnover dropped to its recent low.
The combination of stronger trading activity and a firmer exchange rate could be viewed as an encouraging development for Nigeria’s FX market, although the sustainability of the trend remains critical.
Why the rebound matters
For businesses that depend on foreign exchange to import raw materials, machinery, finished products and other goods, increased liquidity can make it easier to access dollars through formal channels.
Improved market liquidity can also support businesses involved in international trade by reducing uncertainty around the availability and pricing of foreign currency.
For investors, deeper activity in the official FX market can improve confidence in Nigeria’s currency-market infrastructure, particularly as authorities continue efforts to strengthen transparency and price discovery.
Nigeria has been pursuing reforms aimed at improving the functioning of its foreign exchange market, including changes to the regulatory framework governing FX transactions. The 2026 FX Manual introduced by the CBN took effect on June 1 and replaced the previous 2018 edition.
The reforms come as policymakers seek to build a more transparent and efficient FX market while attracting foreign capital and supporting economic activity.
Reserves provide additional support
The latest improvement in FX turnover also comes against the backdrop of a stronger external reserve position.
CBN data cited in the latest market report showed that Nigeria’s foreign exchange reserves reached $52.02 billion on July 20, 2026, the highest level since January 2009.
The reserve figure had also exceeded the CBN’s December projection of $51.04 billion for the entire year.
A stronger reserve position can provide an important buffer for the economy because it improves the country’s capacity to meet external obligations and supports confidence in its ability to manage foreign exchange pressures.
Nevertheless, reserves alone do not guarantee sustained naira stability. Market liquidity, foreign-exchange inflows, oil revenues, investor confidence, import demand and monetary policy all influence the performance of the currency.
What it means for Nigerians
The latest NAFEM development is potentially positive, but its impact on ordinary Nigerians will depend on whether stronger FX liquidity becomes a sustained trend.
If increased dollar supply and market activity continue, businesses may find it easier to obtain foreign currency through official channels. Over time, this could help reduce some of the pressure associated with importing goods and production inputs.
Lower FX uncertainty could also support businesses in planning their costs more effectively.
However, consumers should not expect an immediate reduction in prices simply because NAFEM turnover increased on one trading day. Retail prices are influenced by several factors, including transportation costs, energy prices, import costs, taxes, supply conditions and broader inflationary pressures.
The key question, therefore, is whether the August 17 rebound will be followed by consistently stronger trading volumes and a stable exchange rate.
Outlook for the FX market
The $1.41 billion turnover marks a notable recovery from the sharp slowdown recorded earlier in August.
Yet market participants will be watching subsequent trading sessions closely for evidence that the improvement is structural rather than the result of a few large transactions.
A sustained increase in turnover would provide stronger evidence that liquidity in Nigeria’s official FX market is improving.
For policymakers, maintaining confidence in the market will remain important as Nigeria seeks to attract investment, support international trade and strengthen the naira.
For businesses and consumers, the immediate development offers cautious optimism rather than a guarantee of lower prices or permanent currency stability.
The latest data nonetheless show that after falling to an 11-week low of about $185 million, NAFEM activity can rebound rapidly when market participation increases.
The challenge for Nigeria now is to turn that one-day surge into consistent, transparent and sustainable FX-market liquidity.
Sources: Central Bank of Nigeria data as reported by The Punch and Daily Trust; NGN Market; Mondaq.
