The Nigerian naira settled at N1,850 per British pound (GBP) in the official foreign exchange market on Wednesday, maintaining stability as investor confidence grows. Analysts say the psychological milestone of holding below N1,900/£ has strengthened the morale of Naira traders, reinforcing a positive outlook for the local currency. The trend reflects heightened demand for Naira-denominated assets, even as economic challenges persist abroad.
The parallel or “black” market mirrored the official exchange rate, with the pound trading at N1,878/£. The spread between official and parallel rates now stands below 2%, highlighting improved access for Bureau De Change (BDC) operators. This alignment is seen as a win for retail traders, who now have fewer barriers to foreign exchange, and suggests growing efficiency in Nigeria’s currency markets.
The Central Bank of Nigeria (CBN) has emphasized currency stability over aggressive appreciation, aiming to reduce volatility and maintain investor confidence. Local factors—such as oil production, fiscal policy, and monetary reforms—remain key drivers of the Naira’s value. While the British pound remains a major international currency, domestic economic policies are increasingly shaping the naira’s performance.
Meanwhile, the pound continued its decline on global markets, dipping to 1.334 against the US dollar amid geopolitical tensions in the Middle East and robust US employment data. Rising energy costs in the UK have sparked fears of stagflation, while higher oil and gas prices threaten to sustain inflation above the Bank of England’s 2% target. Economists warn that these pressures may prevent the UK central bank from lowering interest rates this year.
Analysts expect the Naira to maintain its gains in the coming week if current market conditions persist. However, risks remain for the British pound due to potential disruptions in energy exports and prolonged geopolitical tensions. Strong global demand for oil and gas may continue to influence currency valuations, keeping the Naira’s recent gains significant against a weakening pound.
source: nairametrics