The Nigerian economy showed twin signs of robust health on Friday as the naira rallied to its strongest level in months on the official market and the stock market recorded a historic milestone, with investors gaining N35.07 trillion in value over the past 10 months.
The parallel convergence of a strengthening currency and a bullish equities market is being hailed by analysts as a potential indicator of growing investor confidence, underpinned by a series of policy reforms from the Federal Government and the Central Bank of Nigeria.
Data from the Nigerian Foreign Exchange Market revealed that the naira appreciated by 1.1 per cent against the dollar on Friday, closing at N1,421.73/$. This represents its strongest position since the launch of the CBN’s Electronic Foreign Exchange Matching System, gaining N15.24 from Thursday’s rate of N1,436.97/$.
The positive trend was mirrored on the parallel market, where the naira firmed by 0.7 per cent to close at N1,450/$. This narrowed the spread between the official and informal windows to N28.27, signalling a gradual convergence of the two major forex rates.
Market analysts have linked the naira’s sustained rally to a combination of the CBN’s sustained reforms, improved foreign portfolio investment inflows, and stronger oil receipts.
The Head of Financial Institutions Ratings at Agusto & Co., Mr. Ayokunle Olubunmi, stated, “The strengthening naira is caused by the combination of several factors. The acceptability of the various reforms of the CBN and the success in attracting FPIs have significantly supported the currency.”
He added a note of caution, highlighting that “navigating the bond obligations maturing before year-end will be imperative in keeping the exchange rate stable.”
This optimism was recently echoed by Africa’s richest man, Aliko Dangote, who at a world press conference in Lagos expressed strong belief in the currency’s continued recovery. “I can assure you that within the next one or two months… you will see the dollar rate actually improve a lot. If I have dollars today, I would rather sell them than wait for the next month or so,” Dangote had said.
Stock Market Hits Historic High
Simultaneously, the Nigerian Exchange Limited sustained its upward trajectory, closing October on a record high. The market capitalisation, which opened the year at N62.763 trillion, gained 55.87 per cent or N35.07 trillion to close at N97.829 trillion as of October 31, 2025.
Similarly, the NGX All-Share Index, a key performance indicator, crossed the 150,000 basis points mark for the first time in history, closing yesterday at 154,126.46 basis points. This represents a 49.7 per cent increase from its opening position this year.
In October alone, the market capitalisation grew by N7.25 trillion, an eight per cent monthly gain.
The Group Managing Director/Chief Executive Officer of NGX Group, Mr. Temi Popoola, described crossing the 150,000-point threshold as “a testament to the strength and adaptability of our market.” He attributed the milestone to growing investor confidence and the Exchange’s strategic initiatives.
Analysis: A Confluence of Reforms Fuels Market Optimism
The simultaneous rally in the forex and stock markets points to a potentially transformative period for the Nigerian economy. Analysts identify a common thread: the impact of government and CBN policies.
The stability in the foreign exchange market has been a critical catalyst. For the stock market, this stability has allowed companies to recover from massive foreign exchange losses that plagued their 2023 and early 2024 earnings reports, thereby improving their valuation prospects.
Furthermore, the CBN’s ongoing banking sector recapitalisation drive and insurance sector reforms have forced financial institutions to seek fresh capital, directly injecting vitality and liquidity into the equities market. The drop in the yield on Nigerian Treasury Bills to 15 per cent in October from 18 per cent may have also prompted a portfolio rebalancing by investors, shifting funds from fixed income to the higher-yielding stock market.
However, economic experts urge cautious optimism. While the current trends are positive, their sustainability hinges on the continued disciplined implementation of reforms, stability in the crude oil market, and the navigation of upcoming fiscal obligations. The coming months will be crucial in determining if this is the beginning of a prolonged period of economic stability or a peak in a volatile cycle.
