JUST IN: Naira sustains rally, trades below N1,500/$ for second straight day

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The naira extended its rally on Wednesday, closing at N1,500.91 per United States dollar at the official Nigerian Foreign Exchange Market (NFEM). The performance marked a major milestone as the local currency traded below the N1,500/$ threshold for the second consecutive day.

According to data from the Central Bank of Nigeria, “the naira fluctuated between N1,498/$ and N1,507/$ during the trading session,” reflecting a continuation of its positive trajectory since the start of September. The currency had opened the month at N1,526.09/$, firmed to N1,506/$ by Monday, and maintained that rate on Tuesday before appreciating further midweek.

The last time the naira traded at N1,500/$ was March 5, 2025, underscoring the significance of the latest rebound. The parallel market mirrored the trend, with the naira strengthening to between N1,515/$ and N1,517/$ on Wednesday, up from N1,525/$ the previous day.

Analysts linked the rally to stronger naira demand, reduced speculative trading, and improved foreign reserves. “We are optimistic that the positive sentiment in the currency market will be sustained in the near term, particularly with increasing external buffers,” one market watcher explained.

Nigeria’s external reserves rose to $41.59bn as of Tuesday, a $25m increase from the previous day. The steady growth in reserves over recent weeks highlights a healthier external position for the country.

In its Macros and Market Insight report released on Wednesday, Meristem Research emphasized the role of rising reserves in supporting the naira. “These factors boosted the country’s foreign exchange reserves by the end of the month, helping to sustain stability in the naira,” the firm stated.

The research house described the development as “a key economic milestone, as it reflects robust external buffers and enhances the Central Bank of Nigeria’s ability to sustain exchange rate stability.

Meristem also pointed out that the improved reserve levels would likely send a strong message to global investors. “We expect the positive momentum to persist, underpinned by sustained growth in oil receipts and a steady rise in non-oil exports,” the report continued. “This provides a critical buffer for effective exchange rate management and broader macroeconomic stability. Nonetheless, downside risks stemming from weaker global oil prices, security vulnerabilities in the oil sector, and possible production disruptions persist.”

At over $41bn, Nigeria’s foreign reserves now cover about 10 months of imports, far above the international benchmark of three months. Analysts say this provides reassurance for businesses and investors relying on foreign exchange for imports and cross-border transactions.

The sustained appreciation of the naira comes at a time when economic reforms remain central to market confidence. The Central Bank has been spearheading efforts to stabilize the currency through policy reforms aimed at unifying exchange rates, curbing speculative demand, and attracting foreign inflows.

For businesses, a firmer naira means relief in managing import costs and planning investments. For households, experts note that “continued stability could eventually ease inflationary pressures tied to import-dependent consumption.”

With reserves climbing, speculative activities easing, and oil receipts supporting inflows, market watchers believe the current rally has a stronger foundation than past fluctuations. Still, they warn that sustainability will hinge on “the government’s ability to maintain macroeconomic discipline, boost crude oil output, and diversify export earnings.”

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