Nigeria’s naira posted modest gains against the dollar on Thursday, closing at N1,441.44 in the official market, a 0.11% uptick from the prior session. The parallel market mirrored the trend, advancing 0.34% to N1,455 per dollar, signaling easing pressures on foreign exchange demand.
Central Bank of Nigeria (CBN) data showed intraday trading dipping as low as N1,437/$ and peaking at N1,439.35/$, down from N1,444.85 the day before. Analysts attribute the lift to steady inflows bolstering external reserves, now at $43.427 billion, fueled partly by recent Eurobond proceeds and reduced speculative hoarding of dollars.
The CBN’s measured interventions—dialing back the volume of dollar injections—appear to be helping the currency stabilize at what economists call its “equilibrium” level, curbing volatility that plagued earlier months.
Blocked Funds Continue Downward Slide
A brighter spot emerged in the reserves composition: “blocked funds”—trapped dollar holdings from airlines, exporters, and other firms unable to repatriate earnings amid past FX shortages—dropped sharply to $587.209 million this month from $615.478 million at the start.
This marks a year-to-date plunge from $774.65 million, underscoring the success of liberalization policies that have dismantled capital controls. In 2023, these inert assets routinely topped $1 billion, weighing on usable reserves and investor confidence. Today’s lower levels mean more liquid dollars available for imports and interventions, enhancing overall FX resilience.
The decline aligns with broader reserve growth, as oil revenues, remittances, and portfolio investments flood in, expanding dollar liquidity across markets.
Outlook: Steady Gains Amid Cautious Optimism
With external buffers at a multi-year high, market watchers expect the naira to hold firm in the near term, though sustained oil prices above $70/barrel will be key. The CBN’s strategy of gradualism—avoiding aggressive flooding of the market—has tamed speculation, but experts warn of risks from global rate shifts or election-year spending.
For businesses long hamstrung by repatriation delays, the thawing of blocked funds signals a maturing FX regime, potentially unlocking billions in reinvestments and easing import bottlenecks. As Nigeria’s economy pivots toward diversification, these trends could pave the way for a more predictable currency landscape.
