Naira Appreciates to Near Two-Year High Against Dollar

The Nigerian Naira strengthened to its highest level in nearly two years against the US dollar in both official and parallel foreign exchange markets on Tuesday, marking a significant shift in the country’s currency dynamics.

Data from the Central Bank of Nigeria (CBN) indicated that the Naira appreciated to N1,335.96 per dollar in the official market, up from N1,347.78 on Monday. This represents a daily gain of N11.82 and is the strongest official rate since October 2022. Meanwhile, in the parallel (black) market, the currency surged notably by N10, closing at N1,490 per dollar, compared to N1,400 on the previous day.

This appreciation follows a rebound that began on Monday and coincides with a sustained increase in the nation’s foreign exchange reserves. According to CBN figures, reserves rose to $48.37 billion as of mid-February, providing critical support for the currency’s stability. The rise in reserves is largely attributed to improved crude oil earnings and ongoing efforts by the apex bank tomanage demand and boost supply in the foreign exchange market.

The Naira’s performance reflects the impact of recent monetary policy adjustments, including the CBN’s continued implementation of its foreign exchange unification strategy and periodic dollar auctions aimed at reducing the exchange rate gap between official and parallel markets. A narrower gap is seen as key to curbing speculative demand and restoring confidence in the local currency.

For international observers, the strengthening Naira may signal gradual easing of pressure on Nigeria’s external balances. However, inflation remains elevated, and the cost of imports could see some relief if the appreciation is sustained. Market analysts note that consistency in policy and reserve accretion will be crucial in maintaining this positive trajectory.

The development offers a brief respite for the Nigerian economy, which has grappled with severe currency volatility and a severely depreciated Naira in recent years. How long this upward trend lasts will depend on broader factors including global oil prices, domestic production levels, and the continued effectiveness of the CBN’s intervention strategies.