The Nigerian naira saw a modest appreciation on Monday across both the official and parallel foreign exchange markets following the resumption of international usage of naira-denominated debit cards by several commercial banks. This move, seen as a positive step toward easing foreign exchange restrictions, signals growing confidence in the country’s FX liquidity. The naira closed at ₦1,528.33 per dollar at the Nigerian Foreign Exchange Market (NFEM), slightly stronger than Friday’s rate, while also gaining ₦3 in the parallel market.
Foreign exchange inflows surged to $1.79 billion during the week, up from $1.03 billion the previous week, with Foreign Portfolio Investors (FPIs) contributing nearly 67% of total inflows. This continued dominance by FPIs for the seventh consecutive week underscores sustained investor interest in Nigeria’s financial markets, particularly fixed income assets. The FX inflow boost is widely interpreted as a sign of stabilization within the currency market.
Several banks — including First Bank, GTBank, UBA, Wema Bank, and Providus — have now reinstated international spending on naira cards, albeit with varying transaction limits. The Central Bank of Nigeria had previously restricted such usage to conserve foreign reserves. Analysts believe this policy reversal, enabled by improved market liquidity and narrowed gaps between official and black market rates, may normalize international spending for Nigerians.
However, opinions differ on whether the move could trigger renewed pressure on the naira. Some analysts express concern that allowing card usage abroad might spike demand for dollars. But others argue that since official rates are now closer to parallel market rates, there’s little incentive for speculative FX demand. Ayodeji Ebo of Afrinvest emphasized that “there are no cheap dollars anymore,” reducing the motivation for excessive purchases.
Muda Yusuf of the Centre for the Promotion of Private Enterprise echoed this, stating that capped spending limits and a more market-reflective exchange rate would help maintain balance in the FX market. He stressed that so long as naira card usage remains within controlled limits and FX is accessible via formal channels, fears of volatility are largely exaggerated. Both analysts agree that the current market structure is more resilient and less vulnerable to speculative attacks.
Source: Business day