MARKET NEWS

•Naira resumes week at N1,652.25/$1

By Chinwendu Obienyi

Liquidity in the Nigerian Autonomous Foreign Exchange Market (NAFEM) has surged notably, with average turnover increasing by 154.6% week-on-week.

Specifically, the naira appreciated by 1.6% to remain at N1,652.25/$1 while it dipped by 0.3% to exchange at N1,730/$1 in the parallel market.

Similarly, the country’s FX reserves maintained its upward trend as the gross reserve level increased by $117.98 million to reach $40.24 billion, the highest level since January 2022.

Trades were consummated within the N1,609.00/$1 – N1,698.50/$1 range while at the forwards market, the naira rates remained flat across the 1-month (N1,722.70/$1) and 3-month (N1,793.40/$1) contracts, while it expanded across the 6-month (+0.1% to N1,902.65/$1) and 1-year (+0.1% to N2,129.07/$1) contracts.

Reacting to the appreciation of the naira, analysts noted that this reflects continued depreciation of the naira against the US dollar. According to them, If this rate is in the parallel or black market, it underscores challenges with currency stability as a widening gap between official and unofficial rates could pressure the economy, especially for businesses reliant on imports.

Speaking on the outlook of the naira this week, Cordros Research noted that they expect continued naira volatility due to sustained high demand for FX and insufficient autonomous inflows.

“There has to be structural reforms to improve non-oil export earnings and reduce reliance on imports are essential for long-term stability”, they added.

The naira’s short-term appreciation and increased FX market turnover reflect the positive impact of CBN interventions and improved reserves. However, systemic issues like low autonomous FX inflows, high demand, and parallel market pressures persist, requiring comprehensive economic reforms to achieve sustainable currency stability.