Key points
- The Naira appreciated by N1.92 against the U.S. dollar at the official foreign exchange market on Monday.
- The local currency closed at N1,368.26/$, compared with N1,370.19/$ on Friday.
- The gain extended the Naira’s positive performance recorded throughout the previous trading week.
- Analysts attributed the appreciation to improved foreign exchange liquidity and investor confidence.
Main story
The Naira strengthened against the United States dollar at the official foreign exchange market on Monday, appreciating by N1.92 to begin the trading week on a positive note.
Data published by the Central Bank of Nigeria (CBN) showed the local currency closed at N1,368.26 per dollar, compared with N1,370.19 per dollar recorded on Friday.
The latest performance represents a 0.14 per cent appreciation and extends the Naira’s gains recorded throughout the previous trading week.
The domestic currency had opened last week at N1,383.62 per dollar before strengthening to N1,379.68 on Tuesday, N1,372.40 on Wednesday and N1,370.15 on Thursday, before closing at N1,370.19 on Friday.
Market analysts attributed Monday’s appreciation to improved foreign exchange liquidity in the official market and growing investor confidence.
They said ongoing monetary and foreign exchange reforms introduced by the CBN had improved market transparency and price discovery, supporting exchange rate stability.
According to the analysts, the consistency of recent gains suggests the reforms are beginning to deliver a more stable foreign exchange market.
The issues
The Naira has recorded improved stability in recent months following a series of monetary and foreign exchange reforms by the CBN aimed at improving liquidity, transparency and price discovery. Analysts say maintaining the positive trend will depend on sustained foreign exchange inflows, continued investor confidence and disciplined implementation of existing monetary policies.
What’s being said
“The recent appreciation reflects improving foreign exchange liquidity and increased confidence in the official market.” — Market analyst
“The consistency of recent gains suggests that current monetary and foreign exchange reforms are beginning to deliver greater exchange rate stability.” — Market analyst
What’s next
Analysts say the direction of the Naira will depend on the CBN’s ability to sustain foreign exchange liquidity, attract capital inflows and maintain confidence in the official market.
Bottom line
The Naira extended its recent gains on Monday, supported by stronger foreign exchange liquidity and improved investor confidence, although analysts say sustaining the trend will require continued policy discipline.
