The Nigerian currency has been experiencing a positive upward trend in the dynamic currency market, despite recent pressures, and is moving closer to a five-month record. In September, traders remained vigilant as the currency gained momentum and concluded the week strongly in the Investors and Exporters window. The initial level of N1,526.09 per dollar gradually shifted until it reached a high rate of N1,514.86 at Thursday’s close on the Nigerian Foreign Exchange Market. It was the highest value since the beginning of March, at which point it was hovering around N1,512.30, which could signal a moment of change for the stability of Nigeria’s economy.
The course of the week was a planned rally. In mid-week, the market witnessed an NAFEX fixing dip drop to N1,528.13 per dollar. Rate fluctuations ranged from N1,508.00 to N1,529.00 as liquidity increased and the flow of dollars increased the pace. At the end of the week, the naira was up strongly, indicating broader confidence in the market. Even in the market of parallels, where transactions are often mirrored by popular mood, the currency grew by just 0.02 percent to N1,538 for each dollar, highlighting the gains across different segments.
The reason for the surge is a combination of supportive factors. A boosted supply of dollars due to sustained foreign flows, paired with strategic interventions by the Central Bank of Nigeria, provided much-needed stability. An increase of $15 million to the market, along with another $15 billion in general support, helped reduce the volatility and spurred opportunistic purchases. Nigeria’s foreign exchange reserves increased by 0.10 percent to $41.31 billion, up from the previous week’s $41.27 billion, providing an important buffer against external shocks like fluctuations in global oil prices.
Market observers have highlighted that the combination of local and international supply actions is the main reason for the positive expectations about the exchange rate between the naira and the dollar. The crude oil market is at the forefront, especially with upcoming decisions from major producers that have collectively pushed the currency up, giving the possibility of sustained steady dollar-to-naira exchange.
The Nigerian currency appears to be poised for a bit of steadiness in the upcoming months. Inflows of dollars continue, and a slight increase of reserves could be supportive of this trend, but the risk of speculative market demand as well as oil price fluctuation could limit any further progress. For those who track the dollar-to-naira exchange rate, this week’s performance underscores the potential for a gradual recovery, highlighting the importance of being vigilant with regard to economic policies when navigating the world’s uncertainties.
