The Nigerian currency maintained its three-consecutive-day appreciation, with the naira appreciating N1,583 per dollar on Wednesday at the official foreign exchange market.
Narrow appreciation follows Tuesday’s N1,588.5 and Monday’s N1,597, reflecting incremental but steady improvement in local currency performance.
Naira data at the Central Bank of Nigeria show that it had fluctuated between N1,582.5 and N1,590 to a dollar on Wednesday at a mean rate of N1,584.25. The consistent appreciation is a sign of improved market mood, which was most probably a result of a combination of monetary policy interventions and more active investors.
The naira at the official exchange was N2,126.23 per pound and N1,795.07 per euro. But at the parallel market, nothing changed. The dollar stayed the same at N1,625 as yesterday, the pound was down slightly to N2,155 from N2,145, and the euro was around N1,820.
Among the strongest supports for the naira in recent times is Nigeria’s foreign reserve recovery. Reserves stood at $38.53 billion as of Tuesday, higher than the $38.50 billion recorded on Monday. This is after several months of uncertainty triggered by volatility in global oil prices, an increase in external debt, and foreign exchange pressure.
CBN Governor Olayemi Cardoso highlighted the positive trend in Tuesday’s Monetary Policy Committee presentation. He attributed gains on reserves and stability of the naira to policy reforms and better investor confidence. He revealed that Nigeria’s net external reserves, excluding illiquid assets, have increased exponentially from just over $3 billion to almost $23 billion, with a record increase in available actual foreign assets.
Earlier this year, foreign reserves touched a high of over $40 billion in January before declining to $38.31 billion towards the end of March. Volatility was also observed in April, with numbers dropping below $38 billion. But May changed the scenario, with the reserves going up gradually and pointing to recovery on the longer side.
The World Bank’s most recent Nigeria Development Update verifies the assumption that recent fiscal and monetary reforms are beginning to stabilize the macroeconomy. Such structural adjustment, complemented by accelerated revenue mobilization, is promising good days for Nigeria’s future finance.
