Wisdom Engraced
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The naira appreciated by 0.16 percent to 1530.52/$ from 1532.93/$ in the previous trading session on the Nigerian Foreign Exchange Market, data from the Central Bank of Nigeria (CBN) revealed on Wednesday.
According to CBN data, the naira traded as high as 1545/$ and the lowest rate of 1500/$, which was lower than Tuesday’s rate. At the parallel market, CardinalStone Research said that the naira remained unchanged at 1,585.00/$, thus widening the spread for speculative traders.
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Analysts reported that the gap between official and parallel market rates has narrowed to about 3.07 percent from 3.40 percent at the beginning of the week. Although the naira depreciated slightly, analysts suggest the market is stabilising due to structural reforms and increased forex inflows.
Tilewa Adebajo, the Chief Executive Officer of CFG Advisory, said, “We really need to change our mindset about the exchange rate. The reason we are seeing some stability is because there is a new system where everyone uses one portal to buy and sell their dollars or whatever currency.”
Adebajo further explained, “Most of the people abroad now use an app when they want to transfer money to Nigeria. When they use the app, it gives them their official rate, does the transfer through that system, and the settlement is done. I think people are not getting used to the fact that the system has changed in a positive manner.
Comercio Partners, in an investor note, praised the stability of the naira in recent times. “The naira’s relative stability deserves some credit here—holding steady in the N1,450-1,550 range against the dollar, putting a leash on import costs that were previously spiralling out of control.”
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However, the researchers at Comercio Partners cautioned that sustained stability will depend on policy consistency and forex inflows. “Nigeria’s long-term stability hinges entirely on sustained forex inflows, competitive market dynamics (read: breaking up monopolies), and the Central Bank keeping its eye on the ball. One policy misstep, and we’re right back to square one.”
Experts at CardinalStone echoed similar sentiments, saying, “Since the start of the year, the FX rate has remained relatively stable, supported by intensified CBN efforts, a positive current account position, and increased foreign inflows.”
However, they warned that the outlook faces a key risk from the expectation of weaker global crude oil prices, which could impact Nigeria’s FX stability and stoke some inflationary worries
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