ABUJA, Nigeria — The naira strengthened further against the United States dollar on Wednesday, extending its recent recovery at the official foreign exchange market as increased liquidity and stronger trading activity boosted confidence among market participants.
Data released by the Central Bank of Nigeria (CBN) showed that the local currency appreciated to ₦1,369 per U.S. dollar at the Nigerian Foreign Exchange Market (NFEM), marking its third consecutive day of gains.
The latest appreciation was supported by a significant increase in foreign exchange liquidity, with turnover at the interbank foreign exchange market rising by 29 percent to $416.42 million, up from $322.66 million recorded in the previous trading session.
Trading activity also strengthened considerably, with the number of completed foreign exchange transactions increasing to 198 deals, compared with 110 deals a day earlier.
Market analysts attributed the improved performance of the naira to stronger inflows of foreign currency from foreign portfolio investors, exporters and non-bank corporate entities.
The increased supply of dollars helped ease pressure on the official market following recent volatility in the exchange rate.
According to the CBN data, trading during the session remained relatively stable, with the dollar exchanging within an intraday range of ₦1,365 to ₦1,378, indicating improved availability of foreign exchange across the official market.
Analysts said Nigeria’s external reserves, which remain above $52 billion, have continued to provide support for the foreign exchange market alongside the Central Bank’s liquidity management measures.
They noted that the combination of stronger reserves and sustained intervention by the apex bank has helped improve market confidence and reduce pressure on the naira.
Despite the recent gains, economists cautioned that developments in the global economy could still affect the local currency in the coming weeks.
They identified fluctuations in international crude oil prices and geopolitical tensions as major external risks capable of influencing Nigeria’s foreign exchange earnings and overall market stability.
Meanwhile, global oil prices climbed after renewed tensions involving the United States and Iran pushed Brent crude oil above $95 per barrel before prices later eased during trading.
Higher crude oil prices could improve Nigeria’s foreign exchange earnings if sustained, given the country’s dependence on oil exports for a significant share of its foreign currency receipts.
Market observers also stressed that maintaining strong inflows from foreign portfolio investors would remain critical to sustaining liquidity within the official foreign exchange market.
Investors are expected to continue monitoring the Central Bank’s foreign exchange management policies as well as broader global economic developments that could affect capital flows into emerging markets.
The naira’s latest performance underscores the growing importance of consistent foreign exchange liquidity in supporting exchange rate stability.
Analysts say preserving investor confidence, strengthening external reserves and sustaining healthy foreign currency inflows will be key to maintaining the recent gains in Nigeria’s foreign exchange market amid an increasingly uncertain global economic environment.
