Nigeria’s currency, the naira, extended its gains for the third consecutive trading day in the official foreign exchange market, closing the week on an upward trajectory against the US dollar. Central Bank of Nigeria data released Friday indicated the naira strengthened to N1,532.51 per dollar, marking a N2.01 improvement from Thursday’s rate of N1,534.52. The sustained appreciation reflects tentative signs of stability in the country’s formal exchange window amid ongoing economic reforms.
Parallel market traders mirrored the trend, with the naira rising by N5 to N1,560 per dollar on Friday, up from N1,565 the prior day. Over the week, the currency gained N1.05 in official trading and N5 in unofficial markets, narrowing the gap between regulated and street exchange rates. Analysts suggest the gradual convergence could signal improved liquidity management and reduced speculative activity.
The currency’s modest rebound coincided with fresh inflation data showing Nigeria’s headline rate eased to 21.88% in July, down 0.34 percentage points from June’s 22.22%, according to the National Bureau of Statistics. While still near 18-year highs, the cooling inflation—attributed to slower food price increases—may relieve pressure on monetary policymakers ahead of September’s central bank meeting.
Market observers note recent foreign exchange reforms, including the unification of exchange windows and efforts to clear dollar backlogs, appear to be gradually influencing currency dynamics. However, concerns persist over Nigeria’s limited foreign reserves and persistent dollar scarcity, which could test the naira’s resilience in coming weeks.
The developments mark a cautious turnaround for Africa’s largest economy, where currency volatility and inflation have eroded purchasing power throughout 2023. While the back-to-back gains represent the longest appreciation streak in months, economists emphasize that sustained recovery requires deeper structural reforms and increased foreign investment inflows to stabilize the macroeconomic environment.
