Naira nears Key Resistance Level as Nigerian Banks resume International Transactions

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The Nigerian naira is on the verge of breaking through the key resistance level of N1,500 per US dollar in the official market, trading at N1,528 per dollar as of Friday. This development comes after Nigerian banks, including Guaranty Trust Bank (GTBank), United Bank for Africa (UBA), Wema Bank, and Stanbic IBTC, resumed foreign currency transactions using naira debit cards.

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Resumption of International Transactions

GTBank announced that customers can now pay for items anywhere in the world with their naira card, which has a $1,000 limit for international transactions over three months. “This limit covers cash withdrawals from ATMs abroad up to $500 and online and point-of-sale transactions up to $1,000,” the bank stated. UBA also confirmed that all Premium Naira Cards, including Gold, Platinum, and World variant cards, are now fully operational for international transactions.

IMF Support for Nigeria’s Disinflation Strategy

The naira’s firmness follows support from the International Monetary Fund (IMF) for Nigeria’s disinflation strategy. The IMF describes the Central Bank of Nigeria’s (CBN) tight monetary policy as “appropriate and necessary” to curb inflation and stabilize macroeconomic conditions. “Directors agreed that the Central Bank of Nigeria is appropriately maintaining a tight monetary policy stance, which should continue until disinflation becomes entrenched,” the IMF said in its latest Article IV Consultation Report for 2025.

Global Market Trends

Meanwhile, the US dollar eased lower on Friday after gaining strength in the previous session. The Dollar Index decreased by 0.2% to 96.605, tracking the dollar’s exchange rate against a basket of six other currencies. In Europe, the EUR/USD pair increased by 0.1% to 1.1774, with the single currency expected to gain 0.5% per week.

Economic Insights

The CBN held the Monetary Policy Rate (MPR) steady at 27.5% and kept the Cash Reserve Ratio (CRR) at 50% for commercial banks and 16% for merchant banks during the last MPC meeting in May. The IMF also praised Nigeria’s efforts to improve governance and transparency in the monetary system. As the naira approaches the N1,500 per dollar threshold, market analysts predict a potential strengthening of the currency, citing improved economic conditions and increased foreign exchange liquidity.

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