The Nigerian naira showed mild resilience in the unofficial foreign exchange market on Wednesday, appreciating marginally against the US dollar as trading activity began.
Data from the black market indicated that the naira strengthened from ₦1,500/$ to ₦1,495/$ in early morning trading, while in the Nigerian Foreign Exchange Market (NFEM), the local currency appreciated to ₦1,464/$ — showing a modest but steady improvement in value.
CBN interventions support recovery
According to market analysts, the Central Bank of Nigeria’s (CBN) recent interventions, increased dollar liquidity, and fluctuations in import demand remain the major factors driving the naira’s short-term volatility.
CBN data confirmed a slight gain, with the official rate appreciating from ₦1,464.5/$ to ₦1,464/$ earlier in the week. The interventions are reportedly aimed at stabilizing the market and narrowing the gap between the official and parallel exchange rates.
While the naira’s black-market value remains higher than the official rate, the latest movement indicates a short-term stabilization amid broader economic pressures.
Inflation decline may strengthen naira further
In a new report, CardinalStone Research projected that Nigeria’s declining inflation could further support the naira’s appreciation. The investment firm noted that easing inflation, coupled with a persistent current account surplus and rising external reserves, could lead to a stronger naira before year-end.
“We predict that the foreign exchange rate will close the year between ₦1,400/$ and ₦1,450/$,” the report stated.
Analysts added that consistent monetary tightening and improved fiscal coordination could enhance confidence in the local currency, especially if Nigeria’s external reserves continue their upward trend.
Global dollar weakness offers added relief
Globally, the US Dollar Index (DXY) — which measures the dollar’s strength against six major currencies — fell slightly to around 98.90 during Wednesday’s European trading session.
The dip was attributed to concerns over the prolonged US government shutdown and uncertainty surrounding fiscal policy, which weakened investor sentiment toward the dollar.
Market watchers noted that the continued political stalemate in Washington could hurt confidence in US fiscal management, potentially reducing the dollar’s dominance in the short term.
Outlook for the naira
Despite lingering challenges in the parallel market, traders say Nigeria’s currency has shown signs of resilience in recent weeks, buoyed by improved forex supply and investor confidence.
However, structural issues — including limited dollar inflows from exports and persistent demand from importers — continue to weigh on long-term stability.
If the Central Bank maintains its current pace of intervention and inflation continues to ease, analysts believe the naira could strengthen further, potentially keeping the exchange rate below ₦1,500/$ in the coming months.
