Nigeria’s naira began the week on a strong note, appreciating against the US dollar at the official foreign exchange window.
According to official data from the Central Bank of Nigeria (CBN), the local currency closed Monday at N1,597.70 per dollar, marking a gain from the N1,607 it traded the previous Friday.
This marginal but meaningful appreciation of N9.30, or roughly 0.58 percent, indicates a trend of currency stabilization efforts gaining traction. During the day’s trading session, the naira fluctuated within a relatively narrow range. It touched a high of N1,605.05 and a low of N1,595 per dollar, with an average rate of about N1,600.30 at the Nigerian Foreign Exchange Market (NFEM).
The local currency also showed signs of resilience against other major currencies. It traded at N2,113.36 to the British pound, maintaining pressure from the strength of foreign currencies. In the parallel market, which often reflects retail-level demand and informal trades, the naira improved slightly to N1,623 per dollar, compared to N1,630 last Friday. This has effectively narrowed the gap between the official and black-market rates to N25.30, one of the closest margins.
Why the Naira is Gaining Ground
Financial analysts and currency experts suggest that the naira’s recent performance results from sustained reforms by the Central Bank of Nigeria. These reforms include steady foreign exchange (FX) injections into the market, strategic clearing of pending FX backlogs, and ongoing initiatives to encourage transparent and efficient currency trading.
Improved remittance flows from Nigerians in the diaspora also play a key role. Remittances have traditionally been a major source of foreign exchange, and the CBN’s efforts to streamline inflow channels appear to be bearing fruit.
An unnamed Abuja financial consultant explained that the narrowing difference between the official and parallel market exchange rates indicates growing trust in the official FX window. “Speculative buying seems to be on the decline. More traders are returning to the regulated market due to increased transparency and liquidity,” he noted.
CBN’s Policy Strategy Delivering Results
The apex bank has maintained its course of orthodox monetary policy, emphasizing discipline in FX management. Governor Olayemi Cardoso, while speaking at the launch of the World Bank’s Nigeria Development Update in Abuja on Monday, reiterated the bank’s focus on long-term stability through monetary tightening.
He explained that these strategies are already producing measurable results. The volatility in the FX market has dropped sharply to just 0.5 percent, down from a high of four percent a year ago. He further expressed optimism that inflation would begin to cool as the effects of these policies take hold, and that interest rates could follow a downward trend once price pressures ease.
Outlook Ahead
The National Bureau of Statistics will release Nigeria’s inflation data in the coming days. Economic observers anticipate a slight moderation in the inflation rate for April, following a temporary spike in March attributed to rising food and fuel costs.
The CBN’s Monetary Policy Committee, under Cardoso’s leadership, held interest rates steady at 27.5 percent during its last meeting in February. This cautious stance is part of a broader strategy to rein in inflation while stabilizing the currency.
For now, the naira’s steady climb provides cautious optimism that the CBN’s reforms are working, and that Nigeria may be on the path toward a more stable and predictable foreign exchange environment.
