Naira strengthens by 0.72 per cent on rising FX inflows

The foreign exchange (FX) market remained robust last week, recording a moderate gain across both the official and parallel markets.

The local currency’s improvement was helped by sustained foreign exchange inflows, which reduced pressure on demand.

At the official window, the naira appreciated by 0.72 per cent w/w to N1,455.17/$, showing renewed market confidence.

Likewise, in the parallel market, it strengthened to close trade around N1,490/$at the weekend.

Nigeria’s external reserves also increased by 0.83 per cent w/w to $42.57 billion, helped by higher inflows from oil sales, remittances and portfolio investments.

The steady rise has given the Central Bank of Nigeria (CBN) more room to manage short-term pressure and support market stability in the near term.

Analysts at Cowry Asset Management Limited anticipated that the naira would remain stable in the near term, supported by steady foreign exchange inflows and ongoing interventions by the Central Bank of Nigeria.

However, they cautioned that rising import demand or weaker dollar inflows could slow the currency’s further appreciation. While oil prices may face downward pressure due to increased supply, a rebound in global demand could help bolster Nigeria’s external earnings.

Despite this, volatility in global oil markets is expected to keep investor sentiment cautious moving forward.

Meanwhile, the Nigerian equities market extended its bullish run last week, with market capitalisation rising by N2.16 trillion week-on-week to close at N93.3 trillion.

This surge added approximately 2.37 per cent to investors’ portfolios, reflecting sustained optimism in the market.

The NGX all-share index also advanced by 2.37 per cent to close at 146,988.04 points, after reaching a new 52-week high of 147,107 points mid-week.

Despite intermittent bouts of profit-taking, the market demonstrated resilience, pushing the year-to-date return to 42.81 per cent. Market breadth remained positive at 51 gainers and 41 losers, signalling a cautiously optimistic sentiment.

The rally was underpinned by portfolio rebalancing and selective positioning, pointing to sustained investor confidence in market fundamentals.

However, trading activity painted a more mixed picture. Total volume traded dropped sharply by 72.79 per cent to 2.29 billion shares, while the total transaction value declined by 21.11 per cent to N91.13 billion, largely due to a reduction in large block trades.

In contrast, the number of deals surged by 19.36 per cent to 138,301, indicating increased participation from retail and mid-tier investors.

Sectoral performance was generally positive, with five of the six major indices finishing the week higher. The industrial goods index led with a 4.23 per cent gain, followed by insurance at 3.69 per cent, oil and gas at 2.90 per cent.

Commodities index closed at 1.65 per cent, and consumer goods at 0.83 per cent. The banking index was the only sector to decline, slipping 0.41 per cent due to profit-taking and weakening sentiment in certain banking stocks.

Looking ahead, analysts anticipated that the equities market would maintain a mixed but broadly stable trend in the near term. They argued that while stronger corporate earnings and selective bargain hunting may continue to provide support, factors such as elevated interest rates, inflationary concerns, and ongoing portfolio realignments could cap further upside.

Market performance is also expected to be shaped by macroeconomic indicators and policy signals from monetary authorities. In the meantime, investors are advised to focus on fundamentally strong stocks with solid earnings potential.

In this vein, the NGX has announced the decision to wind down its Alternative Securities Market (ASeM) Board, effective July 1, 2025.

As part of this development, companies currently listed on the ASeM Board will be assessed for eligibility and either migrated to the growth board or delisted entirely. Those meeting the necessary criteria will be moved to the growth board, while companies that fall short will have their securities delisted and their names removed from the daily official list of the NGX.

In line with this directive, NGX Regulation Limited (NGX RegCo) has begun the process of migrating Juli Plc to the Entry Segment of the Growth Board. However, Smart Products Nigeria Plc has not met the required standards for migration.

As a result, its securities have been suspended from trading on the NGX platform effective Wednesday, October 8, 2025.

This suspension will remain in place pending the formal delisting of the company’s securities following the closure of the ASeM Board.