Nigeria’s naira opened the week at 1,533.67 per dollar despite foreign reserves climbing to $40.72 billion, highlighting complex market dynamics affecting Africa’s largest economy’s currency stability.
The 0.08% weekly depreciation contrasts with strengthening fundamentals, including Central Bank interventions totaling $166 million and improved foreign exchange inflows. Market analysts attribute the disconnect to external pressures from stronger US dollar performance and softening crude oil prices affecting Nigeria’s primary export revenue.
Currency projections suggest the naira will maintain relative stability through government interventions and enhanced FX liquidity measures. The parallel market rate of 1,543 per dollar shows convergence trends with official rates, indicating improved market confidence in monetary policy effectiveness.
“The FX market should retain current stability, supported by ongoing policy refinements and fiscal measures sustaining liquidity,” stated AIICO Capital in its weekly market assessment. Central Bank data shows consistent intervention patterns maintaining orderly trading conditions.
Nigeria’s improving foreign portfolio investment environment benefits from existing carry trade opportunities, with yields on government securities remaining attractive to international investors. Non-oil export growth provides additional FX supply sources, reducing dependence on volatile oil revenues.
Economic fundamentals show strengthening trends with inflation moderating and current account deficits narrowing. These positive indicators support medium-term naira stability despite short-term volatility from external factors beyond domestic policy control.
The reserve accumulation demonstrates Nigeria’s capacity to maintain external stability while supporting domestic economic activities. Reserve levels now provide 8.5 months of import cover, exceeding international adequacy benchmarks.
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