Naira Strengthens Again, Narrowing Gap with Official Exchange Rate

Naira Strengthens Again, Narrowing Gap with Official Exchange Rate

The Naira recorded fresh gains against the United States dollar on Monday, appreciating to N1,394/$ in the parallel market from N1,405/$ recorded at the close of trading last weekend, signaling continued stability in Nigeria’s foreign exchange market.

The local currency also strengthened in the Nigerian Foreign Exchange Market (NFEM), where it appreciated to N1,369/$, according to the latest data released by the Central Bank of Nigeria (CBN).

CBN figures showed that the indicative exchange rate improved from N1,371.50/$ at the previous close to N1,369/$, representing a N2.50 appreciation for the local currency.

The development further narrowed the gap between the official and parallel markets to N25 per dollar, down from N33.50/$ recorded last weekend, a trend analysts say reflects improving confidence in Nigeria’s foreign exchange market and reduced speculative pressure.

Despite the appreciation, trading activity slowed during the session. Interbank turnover in the NFEM declined by 63.4 percent to $65.2 million, compared with the previous trading session, indicating lower demand for foreign exchange even as the naira gained value.

READ ALSO:

• Mbappé Chases Messi’s Record as France Beat Iraq to Reach World Cup Last 32
• “Unreal”: Bangladesh Explodes as Messi Shatters World Cup Record – VIDEO
• “I Told the President” – Orji Kalu Reveals Private Advice to Tinubu on Insecurity

Market analysts attributed the currency’s improved performance to sustained reforms by the Central Bank of Nigeria, better foreign exchange liquidity, stronger investor confidence and increased dollar supply through official channels.

The recent stability has also helped reduce the premium between the official and parallel markets, encouraging businesses and investors to rely more on formal foreign exchange windows instead of the informal market.

Economists, however, caution that the sustainability of the naira appreciation will depend on continued foreign capital inflows, robust crude oil earnings, adequate external reserves and consistent implementation of monetary and fiscal reforms.

With inflationary pressures gradually easing and foreign exchange liquidity improving, analysts expect the naira exchange rate to remain relatively stable in the short term, although global economic developments and fluctuations in oil prices remain key risks to the outlook.

The latest appreciation reinforces growing optimism that Nigeria’s foreign exchange reforms are beginning to deliver greater market stability and increased confidence among investors and businesses.

Naira Strengthens Again, Narrowing Gap with Official Exchange Rate