Naira Exchange Rates Gap Narrowed Amidst Bullish Expectations
The official and parallel market exchange rates gap narrowed to N2 again in the just concluded as analysts maintain bullish expectation on the local currency outlook.
With an expectation that the Central Bank of Nigeria (CBN) will continue to conducted forex market intervention, a slew of analysts vouch for naira’s stability in 2025.
This has reduced speculative trading activities in the currency market, and foreign investors’ confidence.
The naira bulls have increased sharply on improved confidence in forex market and elimination of distortion around dollar upstreaming by foreign investors.
By market consensus, the Nigerian local currency has chance to appreciate further with minimal depreciation risk given the CBN persistent FX injections.
The FX sales to banks, and flows to unofficial currency market has helped to stabilised the naira, and reduce exchange rates gap to minimal level that discourage speculative transactions, Hoarding US dollar in Nigeria has become more risky based on latest exchange rates trading patterns.
At the Nigerian Foreign Exchange Market (NFEM), the naira posted a moderate decline this week, largely driven by sustained demand pressures.
Trading activity opened on a quiet note, with rates holding within the $/N1532–N1535.5 band and a fixing of N1535.50 per dollar.
The CBN conducted a sizable N1.6 trillion OMO auction as indirect way to bring hot money into Nigerian market. The market remained relatively steady through midweek, with only marginal movements around N1533.
The naira closed at $/N1533.74 on Friday, marking a slight week on week depreciation in the value of the currency from N1534. 71 in the previous week. In the parallel market, spot rate settled at N1535.
Over the week, gross external reserves strengthened by $726.80 million to $39.36 billion as of July 30, providing some cushion for market stability despite the demand-driven pressure.
The Naira stability is expected to persist in the near term, underpinned by CBN policy refinements and supportive fiscal measures to sustain liquidity, analysts said.
Despite a slight pullback on Friday, Global oil prices recorded over 2% week on week gain, supported by renewed concerns over sanctions on Iranian and Russian energy, traders weigh the effects of US tariffs reshaping global trade.
Brent crude settled at $69.5 per barrel, up $1.45, or 2.13%, while U.S. West Texas Intermediate (WTI) crude rose $2.16, or 3.32%, to finish at $67.25.
Similarly, gold prices spiked by gaining 0.8% after weaker-than-expected U.S. payrolls data boosted Federal Reserve rate cut expectations and fresh tariff announcements spurred safe-haven demand.
Markets will closely watch the impact of U.S. tariffs and seek clarity on sanctions as a U.S. envoy visits Russia. #Naira Exchange Rates Gap Narrowed Amidst Bullish Expectations#
Short-Term Benchmark Interest Rates Ease on Liquidity Surplus
