CBN Data Shows Naira Strengthening Across Forex Markets

CBN Data Shows Naira Strengthening Across Forex Markets

The Nigerian currency, the naira, appreciated further against the United States dollar on Wednesday, closing at N1,388/$ in the parallel market, an improvement from N1,395/$ recorded on Tuesday.

The latest gain reflects growing confidence in the foreign exchange market amid improved dollar liquidity and increased participation by investors and exporters.

The naira also recorded appreciation in the official Nigerian Foreign Exchange Market (NFEM), where it strengthened to N1,368.95/$ from N1,373/$ a day earlier.

According to data released by the Central Bank of Nigeria (CBN), the indicative exchange rate declined by N4.05, signalling renewed stability for the local currency across both official and parallel market segments.

As a result, the exchange rate gap between the official and black market windows narrowed to N19.05/$, compared to N20/$ recorded on Tuesday.

A major highlight of the trading session was the sharp increase in market activity. Turnover in the interbank foreign exchange market surged by 75.3 percent, rising to $130.6 million from $74.5 million recorded the previous day.

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Financial analysts said the increase in turnover indicates stronger dollar inflows into the economy, particularly from exporters, oil firms and foreign portfolio investors seeking to take advantage of Nigeria’s high-yield investment environment.

The recent rally marks another positive development for the naira after months of volatility that saw the currency weaken beyond N1,500/$ earlier this year.

Market analysts attributed the renewed stability to a combination of factors, including tighter monetary policies by the CBN, improved investor confidence and increased supply of foreign exchange into the official market.

Reuters recently reported that Nigeria’s currency may continue to strengthen if foreign exchange inflows remain stable and market demand remains moderate.

Currency traders also believe the narrowing gap between the official and parallel market rates could discourage speculation and improve transparency in the forex market.

In recent weeks, the CBN has maintained aggressive monetary tightening measures aimed at stabilising the naira and controlling inflationary pressure within the economy.

Despite the current appreciation, economic experts warned that risks such as inflation, global crude oil price volatility and pressure on Nigeria’s external reserves could still affect the long-term outlook of the local currency.

The naira had traded between N1,380/$ and N1,395/$ in the parallel market over the past week before strengthening further to N1,388/$.

CBN Data Shows Naira Strengthening Across Forex Markets