The naira surged to its strongest level in five months at the official market last week, closing at ₦1,514.86 per US dollar, data from the Central Bank of Nigeria (CBN) revealed.
This marks a significant appreciation from the ₦1,526.09/$ rate at which the currency opened trading in September, reflecting renewed confidence in the foreign exchange market and increased dollar supply.
The last time the naira traded below the ₦1,515/$ mark was on March 6, when it settled at ₦1,512.30/$. The currency also posted a slight gain in the parallel market, strengthening to ₦1,538/$, reflecting a 0.02% appreciation.
Why the Naira Is Strengthening
Market analysts attribute the recent rally to sustained dollar inflows, portfolio investments, and strategic CBN interventions. According to market sources, the apex bank has intervened with over $15 billion in the market in recent months to enhance liquidity and support the local currency.
In its weekly review, AIICO Capital noted that the foreign exchange market opened the week on a relatively calm note, with balanced demand and supply maintaining rates between ₦1,527–₦1,533/$ without requiring CBN intervention.
“Mid-week, offshore supply and opportunistic buying lifted sentiment, driving the NAFEX fixing to ₦1,528.13/$,” the firm stated.
Market momentum further improved after the CBN intervened with $15 million, supported by fresh portfolio inflows, which pushed the naira into a tighter range between ₦1,519 and ₦1,523/$. By week’s end, the naira traded between ₦1,508 and ₦1,529, ultimately closing at ₦1,514.86/$.
External Reserves Inch Up
On the macroeconomic front, Nigeria’s external reserves rose slightly by 0.10% week-on-week, climbing from $41.27 billion to $41.31 billion. Analysts say the increase, driven by stronger foreign inflows, offers the CBN more firepower to manage FX volatility.
They also argue that the buildup in reserves acts as a vital cushion against external shocks, especially given Nigeria’s exposure to fluctuations in oil revenue.
Naira Outlook: Short-Term Stability Expected
The outlook for the naira remains cautiously optimistic in the near term, with analysts expecting stability backed by:
- Robust FX liquidity
- Strengthening external reserves
- Continued foreign portfolio inflows
However, speculative activities, geopolitical risks, and global oil market shifts may introduce short-term volatility.
At a Glance:
- Official rate: ₦1,514.86/$ — strongest since March
- Parallel market: ₦1,538/$ — marginal gain
- CBN intervention: Over $15 billion
- External reserves: Up 0.10% to $41.31 billion
- Outlook: Stable, but watch for oil price fluctuations and OPEC+ decisions
