Naira Hits 10-Month High as Strong FX Inflows, Investor Confidence Boost Liquidity
The Nigerian naira reached a 10-month high last week, closing at ₦1,455.17 per dollar at the official market, its strongest level since December 2024, according to data from the Central Bank of Nigeria (CBN). The local currency gained 0.72 percent (₦10.5) amid rising foreign exchange inflows, a sign of renewed investor confidence in the country’s economic outlook.
Analysts attributed the naira’s rally to robust portfolio investments, increased remittances, and improved foreign exchange liquidity. The parallel market mirrored this positive trend, with the naira appreciating by 0.88 percent to close at ₦1,475 per dollar. Market activity fluctuated early in the week due to temporary outflows from foreign portfolio investors, but strong midweek inflows helped reverse losses, particularly from foreign investors sourcing naira to meet fixed-income obligations.
Financial analysts, including AIICO Capital and Cowry Assets Management Limited, projected short-term stability for the naira, citing steady inflows and CBN’s active interventions. “We expect the naira to stay stable in the near term, supported by steady FX inflows and improved dollar supply,” Cowry Assets said in its review. The firms, however, warned that rising import demand or weaker dollar inflows could limit further gains, while global oil price volatility may keep investors cautious.
Nigeria’s external reserves rose to $42.57 billion, buoyed by higher oil earnings, remittances, and portfolio investments. The increase strengthens the CBN’s capacity to manage short-term market pressures and reinforces expectations of naira stability. Analysts believe that maintaining this momentum could further anchor the currency’s performance as liquidity continues to improve.
In another development, global index provider FTSE Russell placed Nigeria on its Watch List for a potential upgrade to “Frontier Market” status in its latest country classification review. This follows recent reforms that have enhanced FX transparency and reduced transaction delays. Analysts at Meristem Securities said the move “repositions Nigeria back on the radar of global investors,” predicting significant capital inflows over the next year. Such inflows, they added, could further stabilize the naira and strengthen Nigeria’s financial markets if policy consistency is sustained.
source: punch