Market News

The naira and Nigeria’s external reserves closed the five-day trading week on a positive note, recording marginal growth attributed largely to renewed investor confidence following the Federal Government’s successful and oversubscribed Eurobond issuance during the week.

Data from the Central Bank of Nigeria (CBN) showed that the naira appreciated slightly by 17 kobo as the dollar was quoted at N1,436.57 on Friday, the last trading day of the week, compared to N1,436.74 on Thursday at the Nigerian Foreign Exchange Market (NFEM). Over the five trading days, the local currency maintained relative stability, closing at N1,436.57 per dollar on Friday as against N1,436.34 on Monday, the first trading day of November 2025.

At the parallel market, also known as the black market, the naira, appreciated by N25 day-on-day to N1,455 on Friday from N1,480 closed on Thursday.

However, it weakened during the week, depreciating by N15. The dollar was quoted at N1,455 on Friday, compared to N1,440 on Monday, representing a loss of about 1.03 percent over the period. Traders attributed the depreciation to increased demand for foreign currency ahead of the festive season and the activities of speculators who are taking positions in anticipation of future movements in the exchange rate.

Nigeria’s external reserves also recorded a modest rise, climbing to $43.32 billion as of November 6, 2025, representing a 0.2 percent increase from $43.25 billion at the beginning of the month. Analysts said the slight uptick was partly linked to improved foreign exchange inflows, driven by the Eurobond proceeds and oil-related earnings.

A new report by FSDH Merchant Bank Research revealed that Nigeria’s external reserves rose by over $5 billion in the third quarter of 2025, increasing from 37.8 billion dollars in June to 42.9 billion dollars in October. The report noted that this rebound reversed several months of decline and reflected the impact of improved oil receipts and portfolio investment inflows, which boosted the Central Bank’s capacity to stabilise the naira and rebuild external buffers. It added that enhanced transparency in the Investors and Exporters (I&E) window and improved investor confidence have encouraged more foreign participation in the fixed-income market. According to FSDH, the recovery in reserves strengthens near-term currency stability and reduces external vulnerability, though sustaining this growth will depend on Nigeria’s ability to diversify exports and maintain steady capital inflows.

A separate analysis by Comercio Partners described Nigeria’s latest Eurobond issuance as a strong reaffirmation of investor confidence despite the tense global geopolitical climate. The Federal Government successfully raised 2.35 billion dollars through a dual-tranche structure comprising a 10-year note worth 1.2 billion dollars and a 20-year note worth 1.1 billion dollars. The offering attracted an oversubscription of more than five times, generating an order book exceeding 12 billion dollars. Analysts said the strong demand reflected renewed appetite for Nigerian sovereign risk even after recent critical remarks from U.S. President Donald Trump that had initially unsettled market sentiment.

According to Comercio Partners, the oversubscription was driven by investors’ search for higher yields and improved liquidity conditions in global credit markets. The 10-year note was priced at 8.625 percent, while the 20-year note cleared at 9.125 percent, suggesting that investors demanded only a moderate risk premium compared to other African issuers. The proceeds from the bond sale will be used primarily to refinance Nigeria’s $1.1 billion Eurobond maturing this month and partly to finance the 2025 fiscal deficit, which is expected to exceed earlier budget projections.

The Eurobond issuance comes amid more favorable conditions for African sovereign borrowers, with several successful transactions recorded across the continent. Earlier in the year, Kenya raised funds through a 12-year tranche at 8.80 percent, while Angola issued a 10-year bond at 10.125 percent, highlighting renewed investor appetite for high-yield African assets.

Nigeria’s stronger credit story also contributed to the success of the Eurobond. Moody’s upgraded Nigeria’s sovereign rating to B3 from CAA1 in mid-2025, citing improvements in external liquidity and gradual fiscal consolidation. In addition, the Financial Action Task Force (FATF) recently removed Nigeria from its grey list, thereby lowering compliance-related transaction costs for foreign investors. Meanwhile, the expected reclassification of Nigeria by FTSE Russell from “Unclassified” to “Frontier Market” status is projected to attract additional portfolio inflows once confirmed.

However, analysts at Comercio Partners caution that while the Eurobond success provides a short-term boost, it also carries longer-term risks. On one hand, it strengthens external reserves, enhances fiscal flexibility, and supports the government’s ability to meet immediate obligations. On the other hand, it raises exposure to foreign exchange risks and increases interest payment burdens in hard currency. With the Central Bank still working to unify the foreign exchange market and clear backlogs, the analysts emphasise that sustaining investor confidence and ensuring currency stability will remain critical to consolidating the gains from the Eurobond issuance and the recent rebound in reserves.