Naira Hits 4-Month High at N1,518/$ as CBN Interventions and Oil Output Boost Confidence

The Nigerian naira rallied to its strongest level since March, closing at N1,518 per dollar on the official foreign exchange market. This milestone marks a psychological breakthrough, as the currency dipped below the N1,520/$ level for the first time in four months. The Central Bank of Nigeria (CBN) data confirmed the closing rate, highlighting a sustained bullish trend amid recent policy actions.

The surge in the naira’s value is largely attributed to the CBN’s active market involvement, including a $50 million dollar sale and a successful Open Market Operation (OMO) auction, which helped attract foreign investor interest. These moves have been central to stabilizing the naira and restoring confidence in the official FX window, a sentiment reflected by recent portfolio inflows.

In response to improved dollar liquidity, major Nigerian banks—UBA, FirstBank, GTBank, and Wema Bank—have lifted the three-year restriction on using naira-funded debit cards for international transactions. The move is seen as a strong indicator of restored confidence in Nigeria’s FX market and provides relief for consumers previously limited to dollar-funded cards.

Nigeria’s rising oil production has further brightened the outlook for the naira. According to OPEC, the country produced 1.547 million barrels per day in June, a 3.58% increase from May and the highest since January. This rebound in oil output strengthens the country’s foreign exchange reserves and enhances the stability of the local currency over the medium term.

Globally, the U.S. dollar gained strength due to rising inflation tied to Trump-era tariffs, impacting prices of imported goods. Treasury yields also spiked, pressuring other currencies like the yen and sterling. With uncertainty surrounding Fed Chair Jerome Powell’s tenure and concerns over leadership changes, currency markets remained volatile. However, Nigeria’s improved FX fundamentals appear to shield the naira from some of these external shocks.

Source: Nairametrics