The Nigerian naira has seen a notable recovery against the US dollar, appreciating to N1,497.46/$ on Monday, marking a significant milestone as it traded below the N1,500 threshold for the first time in over six months. This latest exchange rate improvement comes after the naira’s repeated tests at the N1,500/$ mark throughout the previous week, with intra-day rates hovering just above that level.
In a report from the Central Bank of Nigeria (CBN), the naira’s value increased by 0.27% from its previous rate of N1,501.49/$, signaling positive momentum in the official market. The currency also saw gains in the parallel market, strengthening by 0.33% to N1,535/$. This recovery was supported by strong foreign exchange (FX) inflows, amounting to $550.90 million in the previous week, with foreign portfolio investments (FPIs) contributing the largest share of $303.8 million.
Analysts attribute the naira’s appreciation to steady dollar inflows, consistent external reserves, and the CBN’s continued policy interventions aimed at stabilising the currency. Market observers have noted that the narrowing gap between the official and parallel markets, with a premium of ₦35.50 (2.23%) between the two, highlights a growing balance in the FX landscape.
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Despite the recovery, experts caution that the sustainability of the naira’s strengthening will depend on further structural reforms, better diversification of FX sources, and attracting more stable foreign direct investments (FDIs). Analysts from AIICO Capital noted that the ongoing dollar liquidity from FPIs, oil exporters, and offshore flows has played a crucial role in maintaining a favorable market tone. However, they also warned that speculative activity could trigger market volatility if unchecked.
The CBN’s foreign reserves also showed positive growth, rising to $41.69 billion, bolstering investor confidence and enhancing the central bank’s capacity to support the naira. Experts predict that, in the short term, the naira may continue to appreciate gradually, with market conditions expected to remain stable, provided that FX inflows and reserves remain healthy.
