The naira recorded a mixed performance at the official and parallel markets in the month of May.

At the end of the month, the naira gained 0.7 per cent month/month against the base currency to close at N1,586.15/$1 at the NAFEM window, while it weakened by 1.2 per cent month/month at the parallel market to close at N1,615.00/$1.

Despite the overall weakness of the naira in May, the president of the Association of Bureau De Change Operators, Aminu Gwadebe, affirmed that several economic factors were favourable to the currency during the month in review.

In a chat with The PUNCH, he said, “I think a lot of indices and parameters have been favouring the Naira’s strength. We have seen the reserve growing, and we have seen some fiscal discipline by way of reducing the debt burden and the repayment of the IMF loan, and we are also seeing a reduction in importation, at least of fuel, which is helping to boost the reserve of the Central Bank of Nigeria.

“Also, there are a lot of reforms, especially towards transparency. We have seen where the electronic foreign exchange markets have ushered in transparency and investors’ confidence. So, there is a lot of investors’ confidence in the economy. Gone are the days when we saw the exit of foreign portfolio investors; now we have seen the return of foreign investors. This is helping the naira a lot to appreciate.”

He added that the naira had appreciated throughout the past week, gaining about N10/$ on Friday to close at 1,615/$ from 1,625/$ on Thursday.

Gwadebe maintained that the way to sustain the appreciation was to continue on the path of discipline, transparency, fairness and realistic policies.

Meanwhile, Moody’s, which recently upgraded Nigeria’s long-term foreign currency and local currency issuer ratings to B3 from Caa1 and changed the outlook to stable from positive, hinged the upgrade on the efforts of the Central Bank of Nigeria, especially in the foreign exchange market.

The credit rating agency said, “The recent overhaul of Nigeria’s foreign exchange management framework, which eliminated multiple foreign exchange rate windows and established a unified forex market, has markedly improved the balance of payments and bolstered the CBN’s foreign exchange reserves. This reform has also strengthened the non-oil segment of the balance of payments, thereby reducing Nigeria’s vulnerability to declining oil prices. Although under our baseline assumption oil prices will decline by 16 per cent in 2025, this will moderate the positive dynamics but will not reverse it.

“The forex market reforms have yielded two major benefits: first, the naira is now more accurately priced by the market, correcting its previous overvaluation and facilitating significant external rebalancing. Secondly, there is now a more efficient distribution of forex liquidity within the economy and CBN reserves. CBN interventions in the forex market have primarily aimed at smoothing currency adjustments. The gap between official and parallel market rates has narrowed to almost disappear. The CBN has enhanced its reserve buffers primarily by repaying external liabilities rather than accumulating gross reserves. By the end of 2024, net reserves had increased to $23bn from $8bn two years earlier. Gross reserves covered seven months of imports and 283 per cent of external debt payments at the end of 2024.”

However, it expressed concerns about the pressure that declining oil prices would have on the CBN’s ability to intervene in the market to strengthen the Nigerian currency.