Naira extends gains, trades below N1,500 against dollar

The Nigerian naira has continued its upward trajectory over the past three weeks, reflecting growing stability in the country’s foreign exchange market. On Friday, currency traders in Lagos exchanged the naira at N1,490/$ in the parallel market, while the official Nigerian Foreign Exchange Market (NFEM) closed at N1,502/$.

Compared to the N1,620/$ rate at the start of the month, the parallel market has seen a N130 gain, signaling a notable appreciation. Meanwhile, on the official market, the naira, which was valued at N1,477.9/$ on January 31, settled at N1,502/$ by the end of Friday’s trading.

President of the Capital Market Academics of Nigeria (CMAN), Prof. Uche Uwaleke, linked the currency’s steadier performance to measures introduced by the Central Bank of Nigeria (CBN). These include the foreign exchange matching system, the electronic matching platform, and the FX code of conduct.

“I think the stability we are witnessing has a lot to do with some of the measures introduced by the Central Bank measures designed to enhance transparency in the forex market. Specifically, I’m referring to the BMatch electronic matching system, and the FX code of conduct. These initiatives have improved transparency and put banks on their toes, knowing that any breach of the code will result in sanctions. That has gone a long way in stabilising the market,” Uwaleke explained.

He also pointed to rising remittances and foreign portfolio investments as additional factors boosting foreign exchange liquidity. “Foreign investments, particularly foreign portfolio investments, have also played a role in improving forex liquidity and, by extension, exchange rate stability. So, I would attribute the current stability in the exchange rate primarily to the CBN’s reforms,” he added.

When asked about the long-term outlook for the naira’s stability, Uwaleke expressed confidence, highlighting increasing oil production and stable crude prices as pivotal factors.

“Yes, I believe it is sustainable, especially considering that oil production is increasing. Currently, we are producing about 1.54 million barrels per day. If we can sustain or even increase production in line with the projections in the 2025 budget and if oil prices remain stable, it will support the exchange rate,” he said.