It seems this time, the Dollar won over Naira as Naira gained ground the previous week. This little reversal definitely keeps our expectations on the edge. We never really know what to expect from the FX market, but we can keep track of what's happening.  

Let's dive in.  

Between Monday, September 14 and Friday, September 18, the NFEM weighted average rate moved from about ₦1,326.30/$ to ₦1,331.20/$.

That is a movement of about ₦4.90 or roughly 0.37%.

So yes, the dollar became slightly more expensive. But this wasn't one of those weeks where the naira suddenly took a major hit.

No. It was more of a gradual move.

So, what was happening?

One thing I always find interesting about the FX market is that the exchange rate is always telling us a story about supply and demand.

People and businesses need dollars for different reasons like importing goods, paying for services abroad, settling international obligations, travelling, and investing.

When demand for dollars rises relative to the dollars available in the market, the price can move up.

And that is partly what we saw last week.

NFEM activity was also not the same every day. Trading turnover jumped to about $778 million on Tuesday, after starting the week around $424 million, before falling back on Wednesday and Thursday.

In simple terms, there was more activity in the market on some days than others.

And that matters because the exchange rate isn't decided by what someone thinks the dollar should cost. It is shaped by the transactions actually happening in the market.

Here is where it gets interesting.

Despite the movement, the naira remained relatively stable.

By Friday, the weighted average rate was ₦1,331.20/$, barely different from Thursday's ₦1,331.28/$.

That tells us something.

There was pressure in the market, but it wasn't strong enough to create a major move.

Nigeria's foreign exchange reserves were also around $54.61 billion by September 14, giving the country a stronger buffer for managing FX pressures.

There were also reports that CBN dollar sales and relatively subdued FX demand were helping to support the naira during the period.

And then there's the dollar itself.

Sometimes, we look at the naira-dollar rate as if everything happening is purely about Nigeria.

But it isn't.

The U.S. dollar was also strengthening globally during the week, with higher oil prices and U.S. Treasury yields influencing expectations around U.S. interest rates.

So, when you see the dollar move against the naira, there are usually two stories happening at the same time:

What is happening in Nigeria?

And

What is happening to the dollar globally?

That is why simply saying “the dollar went up because Nigerians wanted more dollars” doesn't always tell the full story.

What should we take away from this?

The biggest takeaway for me is that small movements still tell us something.

The naira did weaken slightly over the week, but the movement was relatively modest.  

And this is exactly why watching the exchange rate every single day without looking at the bigger picture can be misleading.

One day might tell you that the dollar is rising.

A full week starts to tell you why.

And a few months can tell you whether we are looking at a temporary movement or a bigger trend.

So, the next time you check the dollar rate and see ₦1,331 instead of ₦1,326, don't just ask:

“Why is the dollar going up?”

Ask:

“What is happening to dollar demand, FX liquidity and the wider economy?”

Because behind every exchange rate is a story.

And if you know how to read it, the number starts to make a lot more sense.

For now, let's keep watching the numbers but more importantly, let's understand the story behind them.

Have a great week!

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