The Nigerian naira has climbed to a two-year high, settling at around N1,322/$ in the official foreign exchange market, as increased dollar liquidity continues to support the local currency. The latest appreciation marks another strong move for the naira, which has also gained ground against major currencies including the British pound and euro.
A key driver of the naira’s recent strength is the improvement in Nigeria’s foreign exchange supply. Gross external reserves have risen above $53.8 billion, their highest level in about two decades, giving the Central Bank of Nigeria (CBN) greater capacity to participate in the FX market. Higher crude oil receipts, foreign portfolio investments and stronger diaspora remittances have also increased the flow of dollars into the country.
The improvement in remittance inflows has become particularly important. Recent monthly figures show diaspora remittances approaching the CBN’s $1 billion monthly target, reaching about $947 million. Analysts say the shift toward formal remittance channels, alongside reforms aimed at improving transparency and price discovery, has helped strengthen liquidity and reduce pressure on the naira.
Trading activity in the official FX market has also picked up significantly, with turnover exceeding $14 billion across recent trading cycles, while daily transactions have frequently crossed $130 million. The increased liquidity has helped narrow the gap between official and parallel-market exchange rates, with analysts now suggesting that the naira could remain relatively stable around the N1,300/$ range if current conditions persist.
Meanwhile, global dollar movements could also influence the naira in the days ahead as investors await fresh US employment data. The US Dollar Index was trading around 99 on Friday, with markets closely watching signals from the Federal Reserve on interest rates. For Nigeria, however, the immediate picture remains encouraging: stronger FX inflows, rising reserves and improved market liquidity are giving the naira some of its strongest support in years.
source: nairametrics
