The naira strengthens against the dollar as CBN reforms, improved liquidity and rising reserves support stability at Nigeria’s official forex market
The Nigerian naira strengthened further against the United States dollar on Thursday as improved liquidity and refined price discovery mechanisms at the official foreign exchange market continued to support cautious investor confidence.
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At the Nigerian Foreign Exchange Market, the naira opened trading at about N1,395.09 to the dollar before experiencing mild intraday fluctuations and settling near N1,396.98 by mid-morning.
The narrow movement signalled growing stability and extended gains recorded earlier in the week.
The local currency has now traded below the psychologically important N1,400 level for a second consecutive session, a development analysts describe as a reassuring signal for market participants.
Market watchers attributed the sustained appreciation to policy actions taken by the Central Bank of Nigeria, particularly the enhanced performance of the Electronic Foreign Exchange Matching System, which has improved transparency and efficiency in dollar transactions.
The gradual rise in Nigeria’s external reserves has also helped restore confidence, alongside the clearance of longstanding foreign exchange backlogs that had previously discouraged foreign investor participation.
While the official market posted steady gains, the parallel market remained more cautious.
In Lagos, Abuja and Kano, the dollar exchanged within a range of N1,468 to N1,480, reflecting a narrower premium compared with levels recorded earlier in the month.
Bureau De Change operators said demand in the informal market was largely driven by routine needs such as travel allowances and small-scale imports, noting the absence of speculative pressure that had fuelled volatility in recent months.
Analysts described the calmer tone in the parallel market as a powerful indication that pricing may be approaching a more sustainable equilibrium as January draws to a close.
Looking ahead, financial experts expect the naira to consolidate within the N1,390 to N1,400 band in the near term, provided crude oil production remains stable and the central bank sustains its intervention strategy.
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Attention is now shifting to the week’s closing figures, which are expected to set the tone for the naira’s performance heading into February.
