Naira strengthens to N1,315/$ as Nigeria’s FX reserves hit $54.08bn

The naira strengthened significantly at the official foreign exchange market on Thursday, appreciating to N1,315 per dollar as Nigeria’s external reserves continued to rise.

Data from the Nigerian Foreign Exchange Market (NFEM), the country’s official FX market, showed that the local currency gained 0.84 per cent from the N1,326/$ recorded on September 2.

The latest exchange rate marks the naira’s strongest level since the Central Bank of Nigeria (CBN) introduced the Electronic Foreign Exchange Matching System (EFEMS).

It is also the first time the official exchange rate has returned to the N1,300/$ level since April 2024, highlighting the extent of the currency’s recent recovery.

The naira also recorded gains in the parallel market, appreciating to N1,400/$ on Friday from N1,410/$ on Thursday.

The strengthening of the currency across both segments of the foreign exchange market comes amid a sustained improvement in Nigeria’s external reserves.

According to the CBN, the country’s foreign exchange reserves stood at $54.08 billion as of Thursday, compared with $45.56 billion recorded on January 2.

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This represents an increase of $8.51 billion, or 18.69 per cent, year-to-date.

The rise in reserves provides greater foreign exchange buffers for the economy and could help improve market confidence in the naira, particularly as authorities continue efforts to deepen liquidity and strengthen transparency in the FX market.

The recent appreciation also reflects a broader shift in foreign exchange market conditions, with the naira recovering from the sharp depreciation experienced over the past two years.

However, the sustainability of the latest gains will depend on several factors, including foreign exchange supply, crude oil earnings, capital inflows, import demand and overall investor confidence.

The return of the official exchange rate to the N1,300/$ range represents a significant milestone for the naira, particularly against the backdrop of the currency’s record weakness witnessed during the period of major FX market reforms