The naira recorded a modest gain against the United States dollar in early trading on Monday, supported by improved liquidity conditions and sustained investor confidence in the foreign exchange market.
At the Nigerian Foreign Exchange Market, the local currency traded at an average of ₦1,382.18 to the dollar during the morning session, compared to ₦1,384.25 recorded at the close of trading last Friday, indicating a marginal appreciation.
Analysts attributed the development to increased market liquidity and the positive impact of recent government debt auctions, which have helped stabilise exchange rate movements as the new trading week commenced.
Market turnover at the official window stood at about $172.9m in the last full trading session, reflecting improved participation. The Central Bank of Nigeria’s enhanced Electronic Foreign Exchange Matching System has also been cited as a key factor driving transparency and efficiency in transactions.
Further support came from the apex bank’s adjustment of stop rates on longer-tenor Treasury bills, a move seen as easing yield pressures and reinforcing confidence in the naira.
Parallel Market Holds Steady
In the parallel market, the naira traded within a narrow range, with the dollar quoted between ₦1,405 and ₦1,420 across major commercial hubs.
The relatively slim margin between the official and parallel market rates, estimated at between ₦25 and ₦35, suggests improved alignment and reduced speculative pressure in the informal segment.
Bureau de Change operators linked the stability to sustained foreign exchange supply by the CBN to meet retail demand, including travel allowances and school fees, thereby curbing volatility.
Reserves, Oil Prices Support Outlook
The currency’s performance is further underpinned by strong macroeconomic indicators, including external reserves hovering around $50bn, providing a buffer against external shocks.
In addition, favourable crude oil prices, with Nigeria’s Bonny Light trading above $103 per barrel, have continued to support foreign exchange inflows.
Recent data also indicates a gradual moderation in inflation, alongside a stable monetary policy environment, factors that have strengthened investor appetite for naira assets.
Outlook
Market participants expect the naira to trade within the ₦1,375 to ₦1,395 range in the days ahead, although rising corporate demand for foreign exchange towards the end of the quarter may exert mild pressure.
However, strong liquidity in the banking system is projected to cushion any short-term fluctuations and sustain relative stability in the currency market.
