Naira Strengthens As Increased Dollar Supply Boosts Market

Federation Account Amasses Over ₦5trn In 6months- RMAFC

The Nigerian naira continued to gain strength in the currency market, thanks to an increased supply of US dollars. On Thursday, the naira appreciated by 1.7%, trading at N1,458.95 per US dollar in the official exchange market.

This positive movement was driven by strong foreign currency inflows from three major sources: international oil companies (IOCs), foreign portfolio investors (FPIs), and the Central Bank of Nigeria (CBN). The CBN also played a role by selling foreign exchange and conducting financial operations that increased dollar availability.

With more dollars in the system, the pressure on demand eased, helping the naira strengthen. Earlier in the week, dollar inflows from exporters had also increased, contributing to a 125% rise in foreign exchange supply compared to the previous week.

According to AIICO Capital Limited, most transactions took place at rates between N1,490 and N1,517 per dollar. Analysts believe the recent surge in dollar supply has renewed investor confidence, further boosting the naira’s value.

To increase transparency in the currency market, the CBN recently introduced a foreign exchange code for transactions and warned banks about potential penalties for violating regulations.

Meanwhile, global oil prices remained stable, with Brent crude trading at $76.48 per barrel and West Texas Intermediate (WTI) at $72.46 per barrel. Gold prices reached an all-time high due to increased demand for safe investments amid economic concerns. Investors are also keeping an eye on upcoming policy meetings by the Organization of the Petroleum Exporting Countries (OPEC+) scheduled for February 3, which could impact market trends.