Naira Sets New Record, Hits Five-Month High at N1,514 Per Dollar
- The naira has rallied strongly against the US dollar amid a surge in Nigeria’s foreign reserves
- Recent data from the Central Bank of Nigeria (CBN) indicates that the local currency is near a five-month high in the official market
- Experts have predicted that the naira’s recovery is long-term as investors continue to pour forex into the economy
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The naira closed last week at a five-month high of N1,514.86 per dollar at the official Nigerian Foreign Exchange Market (NFEM), according to Central Bank of Nigeria (CBN) data.
This marks a strong start to September, with the local currency strengthening from N1,526.09/$ at the beginning of the month.
Source: Getty Images
What’s driving the rally
The naira last traded below N1,515/$ on March 6, when it closed at N1,512.30/$.
At the parallel market, the naira also appreciated slightly to N1,538/$, representing a 0.02 per cent gain.
Market analysts attribute the sustained improvement to increased liquidity and steady dollar inflows. The CBN also stepped in with interventions worth about $15 billion, supporting market stability and boosting investor confidence.
AIICO Capital, in its weekly FX review, noted that the market opened last week on a calm note, with balanced flows keeping the naira steady at N1,527–N1,533/$.
Offshore supply and opportunistic buying midweek pushed sentiment higher, while additional portfolio inflows later in the week triggered a rally toward N1,519–N1,523 per dollar.
“By week’s end, the naira sustained gains, trading between N1,508 and N1,529. Overall, the currency appreciated strongly, closing at N1,514.86/$,” the firm reported.
Outlook: Stability with risks
Experts at Cowry Asset Management project that the naira will likely remain stable in the near term across both official and parallel markets.
The outlook is buoyed by sustained dollar inflows, modest growth in external reserves, and renewed investor confidence.
However, risks remain. Pressures from speculative demand, global oil price volatility, and the outcome of the OPEC+ meeting could cap further gains.
Any shift in crude output levels is expected to influence Nigeria’s foreign exchange earnings and, in turn, naira performance.
External reserves see modest growth
Nigeria’s external reserves recorded a slight increase last week, rising 0.10 per cent to $41.31 billion, up from $41.27 billion.
Analysts say the growth, though modest, is significant because it provides a stronger buffer against oil price shocks and external vulnerabilities.
Janet Ogochukwu, an economist and senior banker, disclosed that the naira will remain robust in the long term as foreign portfolio investors (FPIs) continue to pour dollars into the market.
Source: Getty Images
“There is a renewed optimism among investors who are now bring forex into the economy. These are projected to continue in the long-term,” she said.
The uptick also gives the CBN greater capacity to intervene when necessary, helping stabilise the foreign exchange market and ease pressure on the naira.
Near-term confidence
With reserves improving and liquidity conditions strengthening, the naira’s near-term outlook appears stable.
The combination of CBN interventions, foreign inflows, and improved investor sentiment is expected to keep the currency on a firmer footing.
Still, analysts caution that Nigeria must sustain reforms to grow non-oil exports and expand dollar supply to ensure long-term resilience.
Dollar inflows surge to a new high
Legit.ng earlier reported that Financial experts and analysts have hailed the current naira stability amid rising inflows and buoyant reserves.
They believe the naira will remain largely stable, supported by strong forex liquidity and a more efficient FX market.
Industry and market watchers explain that sustained inflows from foreign portfolio investors, stronger non-oil exports, and limited incentives for naira speculation will drive the local currency’s stability.
Source: Legit.ng
