No More N1,660: Naira Finally Appreciates Against Dollar in Parallel Market, Experts Give Reasons

• The naira's inconsistent performance reflects CBN's ongoing efforts to stabilize the currency
• Analysts claim that the CBN's foreign exchange market activity has slowed down as external reserves
• According to the report, the value of the naira dropped from 1,501.61 to 1509.70/$, a weekly decrease of 0.54%

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

The Central Bank of Nigeria's continuous efforts to stabilize the currency are reflected in the naira's varied performance during the previous week across a number of segments.

According to analysts, the CBN's FX market actions have slowed down as external reserves, which as of Thursday were $39.09 billion, have declined. Foreign reserves have been declining since January and have continued to do so this month.

Reasons for Naira Rise

The naira appreciated to roughly 1,552/$ at the parallel market from 1,660 the week before, and participants attributed the rise to increased investor confidence.

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The naira was under constant pressure from demand at the official Nigerian foreign exchange market.

The Meristem weekly report states that the naira lost 0.54 percent of its value week-on-week, from 1,501.61 to 1509.70/$.

In an interview with The PUNCH, Aminu Gwadebe, President of the Association of Bureau De Change Operators, expressed hope for the naira's appreciation.

He said,

“The performance of the naira was significantly positive. Naira performed positively throughout the past week from about 1660; we are now talking about 1552/$. That is significant.

“Providing insights into some of the drivers, Gwadebe said, “a combination of factors are playing together. The pick-up of the interbank proceeds to Bureaux de Change as directed by CBN is helping to inject liquidity and reduce panic in the market. Others are linking it to the Chinese holiday, which has possibly reduced the demand aspect.

Thirdly, he added that the FX Code has continued to bring some sanity, in addition to some discipline, and monitoring oversight, and the confidence of the investor.

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“The market, especially the interbank, is awash with portfolio inflows. Also, there is no negative perception. All along, we have been battling with a negative perception, with confidence in even the management of the Central Bank, but they have been able to put some confidence in them now, especially since they have cleared the $7bn (FX) backlog, and the impact of the policy is making the CBN put their foot on the ground to ensure the reforms continue to give positive reports.

Top Nigerian investment firm predicts new naira

Legit.ng reported that Comercio Partners Limited, a leading investment banking firm, has projected that the naira would close at N1,700 per dollar in the first half of 2025.

The firm made this prediction in its 2025 Macro Economic Outlook report, titled "Looking Forward to the Future."

Comercio stated that the current appreciation of the naira was due to Eurobond issuance, adding that the depreciation of the naira remained inevitable.

Source: Legit.ng