Naira Strengthens to N1,470/$ Amid Rising Forex Reserves as U.S. Dollar Index Gains
The Nigerian Naira showed mixed performance on Friday as it strengthened slightly in the unofficial market while softening in the official trading windows. In the parallel market, the Naira appreciated to N1,470/$ from Thursday’s N1,475/$, reflecting growing demand for local currency amid increased liquidity. Meanwhile, the Nigerian Foreign Exchange Market (NFEM) recorded a marginal depreciation, with the official rate sliding to N1,445.9/$ from N1,442/$, according to data from the Central Bank of Nigeria (CBN).
Year-to-date, the Naira has gained roughly 7 percent against the U.S. dollar, recovering from a significant 41 percent depreciation in 2024. Analysts note that November has seen a modest 0.79 percent increase, with the Naira trading within a weekly range of N1,441/$ to N1,472/$. The currency’s performance underscores gradual stabilization following the CBN’s series of market interventions and monetary reforms.
A key driver of this trend is Nigeria’s rising foreign exchange reserves, which recently hit $46.7 billion—the highest since 2018. These reserves now cover more than ten months of imports, providing a strong buffer against external shocks. Remittances from the diaspora and increased inflows into government securities, especially during the holiday season, have further strengthened liquidity and market confidence.
On the global front, the U.S. dollar index (DXY) turned green at 99.60 after three days of declines. The market is reacting to expectations of potential Federal Reserve rate cuts in December, with traders anticipating a 25-basis-point reduction. Comments from economic policymakers and easing geopolitical tensions, including preliminary talks between Russia and Ukraine, have also reduced demand for the dollar as a safe haven.
Experts believe the combination of robust reserves, targeted CBN interventions, and global currency trends may continue to support the Naira in the coming months. Businesses and investors are closely watching these developments, as stable foreign exchange rates could help boost confidence, reduce import costs, and foster sustainable economic growth.
source: nairametrics