The naira strengthened marginally at the official foreign exchange market on Tuesday as increased demand for government securities pushed yields lower across Nigeria’s Treasury bill and Federal Government bond markets.
The official exchange rate appreciated by two basis points to N1,320.28 to the US dollar, according to Cordros Securities’ Daily Market Update for September 8.
The report also showed that the naira had appreciated by 8.69 per cent since the beginning of the year.
The currency movement coincided with bullish trading in the fixed-income market, where stronger demand pushed average yields lower.
Treasury Bill Yield Falls to 18.8%
The secondary Treasury bill market traded positively, with the average yield declining by four basis points to 18.8 per cent.
Yields fell by one basis point at both the short and middle segments of the curve, while the long end recorded a larger eight-basis-point decline.
Demand was particularly evident in bills with 86, 93 and 212 days to maturity.
The yield on the 212-day instrument recorded a particularly sharp 24-basis-point decline.
Average yields in the Open Market Operations segment also fell by three basis points to 20.5 per cent.
The decline in yields reflects higher demand for the securities because bond and Treasury bill prices generally move inversely to yields.
FGN Bond Yield Drops to 16.4%
Buying interest was even stronger in the Federal Government bond secondary market.
Average bond yields declined by 13 basis points to 16.4 per cent, with yields falling across the short, middle and long ends of the benchmark curve.
Cordros attributed the movement to demand for the April 2029, February 2034 and April 2049 bonds.
The April 2049 bond recorded one of the strongest movements, with its yield falling by 51 basis points during the session.
The detailed bond table on page two of the report shows that several longer-dated securities experienced substantial yield compression.
The July 2045 bond yield, for instance, fell by 32 basis points to 14.80 per cent, while the March 2050 instrument dropped by 48 basis points to 14.67 per cent.
The movements indicate strong demand for longer-duration government securities during the session.
External Reserves Climb to $54.21bn
Nigeria’s broader macroeconomic indicators also showed a significant improvement in external buffers.
Gross external reserves stood at $54.21 billion as of September 7, 2026, compared with $45.57 billion at the beginning of the year.
That represents an increase of about $8.64 billion, or nearly 19 per cent, based on figures contained in the Cordros report.
A larger reserve position can provide the Central Bank of Nigeria with greater capacity to manage foreign-exchange liquidity and respond to periods of currency pressure.
The report also showed that Nigeria’s Monetary Policy Rate stood at 26.50 per cent, compared with 27 per cent at the beginning of the year, while inflation was listed at 15.43 per cent compared with 15.06 per cent at year-start.
Money Market Liquidity Remains Stable
Conditions in the interbank money market were also relatively stable.
The overnight lending rate declined by three basis points to 22.15 per cent, with Cordros attributing the movement to the absence of significant funding pressure in the financial system.
Taken together, Tuesday’s market movements showed a contrasting picture across Nigerian financial assets.
While equities came under substantial selling pressure, investors showed stronger appetite for fixed-income securities, driving yields lower across government bonds and Treasury bills.
At the same time, the marginal strengthening of the naira and expansion in external reserves provide additional support to the country’s financial-market outlook.
The sustainability of those trends will depend on several factors, including inflation, monetary policy, foreign-exchange liquidity, government borrowing requirements and the direction of investor demand for naira-denominated assets.
