Nigerian naira continued to rule supreme this week, touching a four-month high against the United States dollar and ending the week at N1,518 per dollar on the official Nigerian Foreign Exchange Market. This is its highest since March and reflects growing confidence in Nigeria’s monetary policy management and currency stability.
The Central Bank of Nigeria (CBN) announced that the exchange rate closed on Monday at N1,518 per dollar, lower below the pivotal N1,520 level for the first time in months. The naira is said to be now ready to test and even slide beneath the N1,500 point if the trend holds.
Several factors are driving the naira appreciation. In the first place, recent CBN interventions in the forex market, i.e., $50 million dollar sales and highly successful OMO auction, are awakening foreign portfolio investor demand. The resultant capital inflow is helping to enhance dollar liquidity and market confidence in the FX market in Nigeria.
To the growing optimism is now the latest move of Nigerian heavyweights relaxing longstanding cross-border usage of naira debit cards. The foreign usage of naira-funded cards had been blocked by majority of banks for more than three years now due to dollar scarcity. The services resumed now are GTBank, FirstBank, Wema Bank, and United Bank for Africa (UBA) banks, placing the foreign exchange situation to have picked up. Dollar-denominated domiciliary account-linked debit cards also continued to work.
Except for monetary policy and intervention, Nigeria’s petroleum industry also aided in strengthening the naira. Nigerian oil production increased to 1.547 million barrels per day in June—the highest level since January, according to the Organization of Petroleum Exporting Countries (OPEC). The increase of 3.58 percent from May production is assisting in pumping foreign exchange into Nigeria and strengthening the currency further.
Across the world, the American currency is also gaining strength on the heels of recent inflation figures that showed dramatic increases in imported items like electronics, home furnishings, and coffee. The increases, triggered by the tariff policy of former President Donald Trump, forced investors to hedge their short positions on Federal Reserve rate reductions. With this, the U.S. currency gained value, especially against the Japanese yen that posted an all-time low of 149 per unit.
All things considered, however, naira strength is most aptly described as being fueled by better FX liquidity, sentiment, and macro reform. With better oil production and CBN intervention, Nigeria’s local currency will stabilize, and even likely revert long-term if these drivers continue.
