Pound climbs to N1,837 as Naira holds steady amid stronger FX market liquidity

The British pound closed at about N1,837 against the naira ahead of the final trading session of the week, as the Nigerian currency maintained relative stability in the official foreign exchange market.

The latest data from the Central Bank of Nigeria showed that the pound-to-naira exchange rate has recorded moderate movements in recent weeks, trading within an estimated range of N1,805 to N1,875 per pound over the past 30 days.

The US dollar, meanwhile, traded around the N1,360/$ level in the Nigerian Foreign Exchange Market (NFEM), reflecting the relative stability that has characterised the naira in recent months.

The naira has strengthened on an annual basis compared with previous years, when it experienced significant volatility and traded above N1,900 to the dollar at various points in 2024.

The improved stability has been linked partly to reforms introduced by the CBN to deepen foreign exchange liquidity, improve transparency and align Nigeria’s FX market with international standards.

READ ALSO; Nigeria’s FX turnover hits 11-week low at $185m as Naira weakens to N1,365/$

The apex bank has reported a significant increase in average daily foreign exchange turnover, from levels below $100 million to more than $400 million on a regular basis, with some trading days recording turnover of up to $1 billion.

Nigeria’s foreign exchange reserves, which are close to $53 billion, have also provided additional support for the naira and strengthened the country’s external position.

The CBN has maintained a tight monetary policy stance, with the Monetary Policy Rate (MPR) currently at 26.5 percent, as the apex bank continues efforts to control liquidity and contain inflationary pressures.

Inflationary pressures have also shown signs of moderation, while improved food production and harvest-season supplies have provided some relief. At the same time, stronger oil production and improved trade balances have helped ease some of the fiscal pressures that previously weighed heavily on the naira.

International rating agencies have also taken note of Nigeria’s economic adjustments, with Moody’s, among others, citing improvements in transparency and debt management in its assessment of the country’s sovereign credit position.

Pound Gains Against Dollar

Beyond the domestic market, the British pound strengthened against the US dollar in early European trading on Friday, approaching $1.3495.

Sterling gained ground after softer-than-expected US inflation and producer-price data reduced expectations of further interest-rate increases by the Federal Reserve.

Attention has now shifted to the release of US retail sales data for July, which could provide additional clues about the direction of US monetary policy.

According to the US Bureau of Labor Statistics, wholesale prices of goods and services remained unchanged in July, compared with market expectations of a 0.2 percent increase. The figure followed a 0.1 percent decline recorded in June.

The Producer Price Index excluding food and energy increased by 0.2 percent month-on-month in July, slower than the 0.4 percent rise recorded in the previous month and below the 0.3 percent increase expected by analysts.

READ ALSO: Food prices defy stable naira as transport costs keep inflation high

Market pricing showed the probability of a September rate hike falling to about 34.8 percent from 40 percent following the release of the PPI figures, according to the CME FedWatch Tool.

However, geopolitical tensions in the Middle East could provide support for the US dollar as investors seek safe-haven assets.

Recent comments concerning the Strait of Hormuz, including statements by Iranian officials and US President Donald Trump, have heightened market attention over potential disruptions in one of the world’s most important energy corridors.