The naira surged to a two-month high on Wednesday, trading at N1,565.46 per US dollar in the official foreign exchange market. This marks the highest level for the Nigerian currency since April 4, 2024, when it exchanged at N1,567.02. The local currency gained N13.82 from Tuesday’s rate of N1,579.28, representing a 0.9% appreciation. Simultaneously, in the black market, the naira strengthened by N5, closing at N1,605 to the dollar, reflecting consistent gains across both official and parallel markets.
Central Bank of Nigeria (CBN) Governor Olayemi Cardoso attributed the currency’s improved performance to ongoing reform measures and tighter monetary policy. He highlighted that the previously wide gap between the official and parallel exchange rates has narrowed significantly. This alignment, he noted, is a major achievement in Nigeria’s foreign exchange policy and reflects enhanced market discipline and reduced arbitrage opportunities.
Cardoso credited the federal government’s steadfast commitment to reform and clear policy direction for the stability. According to him, transparency in the FX market has encouraged investor confidence and curtailed speculative behaviors. This renewed trust has spurred an increase in autonomous dollar inflows from sources outside oil exports, such as foreign portfolio investors and non-bank corporates.
Another key benefit of these reforms, according to Cardoso, is the strengthening of Nigeria’s external reserves, which have now surpassed $38 billion. This gives the country close to 10 months of import cover and a more secure buffer against external shocks, such as oil price fluctuations or global financial volatility. He emphasized that such improvements signal stronger economic resilience and lay a more stable foundation for future growth.
Despite the progress, analysts at FSDH Merchant Bank cautioned that reforms must continue. They urged the CBN to remain proactive in managing FX market dynamics while noting that monetary policy alone is insufficient. Structural reforms, fiscal responsibility, and broader economic adjustments, they said, are necessary to ensure inflation control, macroeconomic stability, and the long-term sustainability of Nigeria’s recovery.
Source: Business day