Naira strengthens against major currencies ahead of festive season

The naira recorded gains against major international currencies in both the official and parallel foreign exchange markets on Monday, December 23, 2024, providing a glimmer of hope for Nigeria’s economy during the festive season.

At the official market, data from FMDQ indicated that the naira appreciated to N1,539.55/$1, a marginal improvement from the N1,541.68/$1 rate recorded on Friday, December 20, 2024. This represents a gain of N2.13.

Similarly, at the parallel (black) market, the naira strengthened to N1,655/$1, up from N1,660/$1 the previous day, marking a  N5 gain.

Other notable improvements include: British Pound Sterling: The naira appreciated by N10, trading at N2,140/£1, compared to the previous rate of  N2,150/£1.

Euro: The naira gained N35, trading at N1,735/€1, an improvement from  N1,770/€1 the prior day.

Canadian Dollar: The naira held steady at N1,280/CA$1, maintaining its position from the previous day.

Economic analysts attribute the naira’s improvement to increased dollar inflows from remittances during the holiday season and concerted efforts by the Central Bank of Nigeria (CBN) to stabilize the local currency.

“The festive period often sees a surge in diaspora remittances, which bolsters foreign exchange supply and eases pressure on the naira,” said Dr. Tunde Oladipo, an economist at Lagos Business School.

“Additionally, the CBN’s interventions, such as targeted sales at the official market, have contributed to this relative stability.”

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For many Nigerians, the naira’s appreciation offers some respite amid economic challenges. Business owners and importers, who rely heavily on foreign exchange for transactions, expressed cautious optimism.

“This is good news for businesses, especially those importing goods for the festive season,” said Funmi Adewale, a trader in Lagos. “A stronger naira helps reduce costs, which could translate to lower prices for consumers.”

However, financial experts warn that these gains may be temporary.

“While the naira’s appreciation is encouraging, the underlying issues affecting Nigeria’s forex market—such as insufficient production, heavy reliance on imports, and speculative trading—still need to be addressed,” noted Mr. Michael Ogundele, a currency market analyst.

The strengthened naira comes as Nigerians prepare for increased spending during the holidays. Economists project that the currency’s performance will continue to depend on the balance between forex inflows and market demand.

As the festive season unfolds, all eyes remain on the CBN’s policies and the broader economic environment to determine whether this positive trend can be sustained in the long term.