The Nigerian naira has appreciated significantly in the parallel market, trading at ₦1,600 per US dollar as of this week, marking one of its strongest performances in months. The rebound comes after a period of extreme volatility that saw the local currency plummet to historic lows earlier in the year.
Currency traders in Lagos and Abuja confirmed the new rate, noting a sharp drop in demand for dollars from speculative buyers and importers, as well as increased availability of foreign exchange in the market. Some traders attributed the recent gains to a combination of improved dollar inflows, tighter regulatory oversight by the Central Bank of Nigeria (CBN), and reduced pressure on demand from business owners.
Analysts say this appreciation is largely driven by the CBN’s ongoing foreign exchange reforms. These include the unification of exchange rates, the clearing of FX backlogs owed to airlines and foreign investors, as well as clampdowns on illicit forex activities through Bureau De Change operators. In recent months, the apex bank has also increased its intervention in the official Investors and Exporters (I&E) window, helping to stabilize supply to legitimate market participants.
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The strengthening of the naira is seen as a positive signal for both domestic and international investors, many of whom had held back on portfolio and direct investments due to uncertainty around currency risks. The improvement could also ease inflationary pressures in the short term by lowering the cost of imported goods, especially food and fuel, which are heavily dollar-dependent.
Despite the encouraging signs, experts warn that the naira’s gains may be fragile unless broader economic fundamentals are addressed. “Sustaining this momentum will require a long-term commitment to fiscal discipline, expansion of non-oil exports, and a stable macroeconomic environment,” said Dr. Ayo Shonibare, an economist based in Abuja.
Additionally, the continued rise in crude oil prices and increased remittance inflows have helped improve Nigeria’s foreign reserves, further boosting confidence in the naira. The CBN has reiterated its commitment to supporting a market-driven exchange rate and discouraging hoarding of foreign currencies.
While the official exchange rate still differs from the parallel market rate, the narrowing gap is seen as a move toward eventual convergence, which many stakeholders believe will bring greater transparency and confidence to Nigeria’s forex regime.
As stakeholders continue to monitor the situation, many are cautiously optimistic that the naira could maintain its upward trajectory if current reforms are sustained and external pressures remain manageable.
