The Nigerian naira showed mixed performance across different exchange segments over the past week, as ongoing economic interventions by the Central Bank of Nigeria (CBN) continue to influence market trends.
In the parallel market, the naira experienced a notable appreciation, rising from ₦1,660/$ to approximately ₦1,552/$. Market analysts attribute this gain to improved investor confidence and liquidity injections into the foreign exchange sector. However, at the official exchange window, the naira faced depreciation pressures, weakening by 0.54% to ₦1,509.70/$, according to a recent report from Meristem.
Factors Driving Naira’s Performance
Aminu Gwadebe, President of the Association of Bureau De Change Operators, highlighted multiple factors contributing to the naira’s recent appreciation. He emphasized that improved forex supply to Bureau de Change operators, seasonal changes in demand, and policy measures implemented by the CBN have played key roles. He also noted that investor confidence has improved due to the central bank’s efforts to stabilize the forex market.
Market analysts have pointed out that the CBN’s recent clearing of a $7 billion forex backlog has had a significant impact on easing liquidity constraints. The central bank’s focus on transparency and active engagement with stakeholders has also helped restore confidence in the currency.
Market Outlook and Future Projections
Despite recent gains, financial experts remain cautious about the long-term stability of the naira. A report by Comercio Partners suggests that, due to Nigeria’s continued reliance on fuel imports and structural economic challenges, the naira may depreciate to between ₦1,700 and ₦1,800 per dollar by mid-2025. The firm emphasized the need for comprehensive economic reforms to ensure sustainable exchange rate stability.
On a positive note, analysts at Cowry Asset Management predict that the naira will maintain relative stability in the short term, provided there are no major market disruptions. They also stressed the importance of aligning fiscal and monetary policies to enhance economic resilience.
CBN’s Commitment to Exchange Rate Stability
CBN Governor Olayemi Cardoso reaffirmed the institution’s commitment to maintaining a stable forex market. Speaking at a regulatory policy framework event, Cardoso noted that clearing the forex backlog has facilitated smoother fund repatriation for businesses and foreign investors. He assured that ongoing monetary policies would continue to support exchange rate reforms and boost market confidence.
As Nigeria navigates economic uncertainties, the performance of the naira will largely depend on external market conditions, investor sentiment, and the effectiveness of CBN’s policy measures.
