The naira has surged to its strongest position in five months, closing at N1,349.54 against the US dollar on August 17, 2026. This notable increase follows a recent policy shift by the Central Bank of Nigeria (CBN) that allows banks greater access to its Standing Lending Facility (SLF), enhancing liquidity in the foreign exchange market.

On Monday, the naira appreciated by N8.07, marking a 0.59 percent gain from the previous trading session, where it was quoted at N1,357.61. This rise is the highest since April 22, 2026, when the dollar was priced at N1,348.45 in the official market, according to reports from Legit.ng.

The CBN's decision to lift restrictions on banks' access to the SLF is expected to bolster liquidity and improve the transmission of monetary policy throughout the financial sector. This policy change has coincided with a dramatic increase in interbank foreign exchange turnover, which surged by 265.86 percent to reach $437.53 million on Monday. This figure represents the highest single-day volume recorded since July 22, 2026.

The trading activity also saw a significant rise in the number of deals, which jumped by 29.93 percent from 137 to 178. The previous Friday’s turnover stood at just $119.59 million, highlighting the marked increase in market participation.

In the parallel market, the naira also gained ground, strengthening to N1,410 per dollar from N1,420 the previous week. This improvement has narrowed the gap between official and parallel market rates to 4.48 percent, down from 4.64 percent. Such a trend indicates a growing alignment between exchange-rate movements across the two markets, although a notable difference still persists.

Supporting the naira's recent performance is Nigeria's external reserves, which reached $52.25 billion as of August 13, 2026, the highest level in 17 years. This represents a 28.32 percent increase from the $40.72 billion recorded during the same period last year. The rise in reserves enhances the CBN's capacity to manage foreign exchange liquidity and fulfill international obligations, providing a stronger foundation for the naira after months of instability.

The combination of increased FX turnover, rising reserves, and improved access to liquidity suggests a potentially transformative period for Nigeria's foreign exchange market. For consumers and businesses, a more stable naira could alleviate some of the pressures associated with the cost of imported goods and services, provided this trend continues.

However, the sustainability of the naira's gains will depend on ongoing liquidity in the forex market, consistent reserve accumulation, and the CBN's ability to maintain order in the currency market. The recent adjustments by the CBN signal a proactive approach to stabilizing the naira, which could have far-reaching implications for Nigeria's economy in the coming months.