The naira appreciated by 10 basis points at the weekend to N1,520 per dollar on the back of sustained increase in the country’s foreign exchange (forex) reserves.
Data at the Nigerian Autonomous Foreign Exchange Market (NAFEM) and the unofficial parallel market indicated that the naira rallied across the markets as the forex reserves rose for the ninth consecutive week.
At the NAFEM, naira rose by 1.0 per cent to N1,520 per dollar. It traded at N1,535 per dollar at the parallel market. This narrowed the gap between the markets to N15, underlining the stability in the demand and supply curve on the back of continuing forex inflows.
Data by the Central Bank of Nigeria (CBN) showed that Nigeria’s forex reserves increased for the ninth consecutive week to close weekend at $41.500 billion as against $41.268 billion recorded penultimate week, representing an increase of $232 million.
Experts were unanimous that the naira and forex reserves performances were considerably due to inflows from foreign investors.
Analysts at Cordros Capital Group stated that naira’s performance was “supported by supply from foreign portfolio investors” as well as $15 million intervention by the apex bank during the week.
In emailed note to investors, analysts at Bismarck Rewane’s Financial Derivatives Company Limited attributed rising forex inflows to surge in oil prices and multiple inflow channels created by the CBN.
“In the near term, we expect naira stability to persist on the back of resilient forex market liquidity. Renewed capital inflows should be supported by the anticipated Fed rate cut and broader easing in global yields, which would enhance investor appetite for naira assets.
“Concurrently, improving non-oil export receipts and diminished incentives for speculative positioning in the naira are likely to sustain the momentum of domestic inflows,” Cordros Capital Group stated.
Analysts said foreign exchange inflows from both local and foreign sources would remain strong in the meantime, possibly surpassing 2024 levels of $2.51 billion.
