Naira Gains Slightly to 1530.52/$ Amid Stability Efforts and Structural Reforms
The Nigerian naira showed a marginal appreciation of 0.16% on Wednesday, closing at 1530.52/$ compared to the previous day’s rate of 1532.93/$ on the official foreign exchange market, as reported by the Central Bank of Nigeria (CBN). The currency fluctuated between 1500/$ and 1545/$ during the trading session, with analysts pointing out that the market is stabilizing due to structural reforms and an increase in foreign exchange inflows. Despite these efforts, the parallel market rate remained steady at 1585/$, continuing to highlight a noticeable gap between official and parallel market rates.
Tilewa Adebajo, CEO of CFG Advisory, attributed the recent stability in the naira to the adoption of a unified portal for currency exchange. According to Adebajo, overseas remittances are increasingly channeled through this system, offering official rates, and bypassing parallel market operators. She believes that as more players adopt this platform, Nigeria’s foreign exchange system will enter a phase of “price discovery,” reducing reliance on the Central Bank for dollar supply.
Investment firm Comercio Partners has praised the relative stability of the naira, which has held steady in the 1,450-1,550 range, thus alleviating some pressure on import costs. However, analysts caution that this stability is contingent on continued foreign exchange inflows and the consistency of government policies. Without these, they warn that the naira’s stability could be undermined, potentially sending the country back to a volatile exchange rate scenario.
Despite positive developments, experts also expressed concerns about the risks posed by falling global oil prices. Brent crude has dropped by 5.5% year-to-date, influenced by rising global supply and weakening demand. This decline, coupled with policy shifts in major oil-producing nations like the U.S. and OPEC+, could further threaten Nigeria’s forex stability. Analysts emphasize the importance of diversifying the economy and ensuring robust foreign exchange inflows to shield Nigeria from potential external shocks.
source: punch