At the close of trading on Wednesday, the naira appreciated by 0.16 per cent to 1530.52/$ from 1532.93/$ in the previous trading session on the Nigerian Foreign Exchange Market, data from the Central Bank of Nigeria revealed.
According to CBN data, the naira traded as high as 1545/$ and the lowest rate of 1500/$, which was lower than Tuesday’s.
At the parallel market, CardinalStone Research said that the naira remained unchanged at 1,585.00/$, thus widening the spread for speculative traders. Analysts reported that the gap between official and parallel market rates has narrowed to about 3.07 per cent from 3.40 per cent at the beginning of the week.
Although the naira depreciated slightly, analysts suggest the market is stabilising due to structural reforms and increased forex inflows.
Sharing her thoughts on the development with The PUNCH, the Chief Executive Officer of CFG Advisory, Tilewa Adebajo, said, “We really need to change our mindset about the exchange rate. The reason we are seeing some stability is because there is a new system where everyone uses one portal to buy and sell their dollars or whatever currency.
Most of the people abroad now use an app when they want to transfer money to Nigeria. When they use the app, it gives them their official rate, does the transfer through that system and the settlement is done.
“I think people are not getting used to the fact that the system has changed in a positive manner. Our so-called parallel market operators are the ones who have not yet caught on to this. A lot of the overseas inflow is coming in through that platform. So, there is supply in the market. What is left now is for the parallel market operators and the Bureau De Change to also adopt that method. When that is done, we are moving into what is called price discovery. CBN is not the major supplier of dollars to the market any longer, and that is good. Our foreign exchange system has evolved, and a lot of people have not yet understood that evolution.”
Comercio Partners, in an investor note, praised the stability of the naira in recent times.
The naira’s relative stability deserves some credit here – holding steady in the N1,450-1,550 range against the dollar, putting a leash on import costs that were previously spiralling out of control,” the researchers at the investment house said.
While acknowledging the short-term gains, they caution that sustained stability will depend on policy consistency and forex inflows.
“Nigeria’s long-term stability hinges entirely on sustained forex inflows, competitive market dynamics (read: breaking up monopolies), and the Central Bank keeping its eye on the ball. One policy misstep and we’re right back to square one,” read the report.
Experts at CardinalStone echoed similar sentiments on Wednesday, saying, “Since the start of the year, the FX rate has remained relatively stable, supported by intensified CBN efforts, a positive current account position, and increased foreign inflows.
“However, the outlook faces a key risk from the expectation of weaker global crude oil prices, which could impact Nigeria’s FX stability and stoke some inflationary worries.”
So far, Brent crude prices have declined by 5.5 per cent year-to-date, driven by expectations of rising global crude supply, policy shifts, and weakening demand. Notably, the U.S.’ push to boost oil production has led the Energy Information Administration to revise its 2025 crude production forecast to 13.61 mbpd, up from the previous estimate of 13.55 mbpd and the 2024 average of 13.22 mbpd.
Concurrently, OPEC+ has reaffirmed its December 2024 decision to gradually unwind 2.20 mbpd in voluntary production cuts starting April 1, 2025. This move could further increase supply and put downward pressure on oil prices.
With declining crude prices and potential supply increases, analysts warn that Nigeria’s forex stability remains vulnerable to external shocks.
