Nigeria’s currency, the naira, extended its rally in the foreign exchange market on Thursday, appreciating to N1,385 per US dollar in the official window, buoyed by a combination of global dollar weakness and improving domestic foreign exchange conditions.
Data from the Central Bank of Nigeria (CBN) showed that the naira recorded a strong performance at the Nigerian Foreign Exchange Market (NFEM), reflecting growing investor confidence and improved sentiment around both global and local currency dynamics.
During intraday trading, the naira strengthened to as high as N1,367 per dollar, before touching a session low of about N1,400 per dollar.
It eventually closed around N1,385/$, improving from N1,394/$ recorded on Wednesday. Market analysts said the trading pattern points to increased dollar supply and reduced pressure on the local currency within the regulated FX window.
The latest appreciation continues gains recorded earlier in the week and comes amid shifting expectations around the United States economy and monetary policy. Globally, the US dollar has faced renewed pressure as investors reassess the outlook for interest rate hikes and rotate towards riskier assets.
READ ALSO: Naira official rate rises to N1,394/$1 amid FX market optimism
Dollar sentiment weakened earlier in the week on optimism that the US government may avert a shutdown, reducing demand for safe-haven assets.
Speculation that US President Donald Trump could soon announce a nominee for the position of Federal Reserve chair also fuelled uncertainty about the future direction of US monetary policy.
In addition, softer inflation data from major economies, including Japan, contributed to a broader shift in investor sentiment away from the dollar.
Although the greenback staged a modest rebound later in the week, analysts said the overall tone of the global FX market remains tilted toward a weaker dollar, providing support for emerging market currencies such as the naira.
On the domestic front, experts attributed the naira’s recent gains to improving FX liquidity and policy-driven reforms introduced by the CBN.
A Lagos-based financial analyst, Mr. Tope Adeyemi, said the strengthening of the naira reflects “a healthier balance between demand and supply in the official FX market.”
“What we are seeing is the impact of better FX inflows from exports, remittances and portfolio investments, combined with tighter oversight and transparency in the market,” he said.
Similarly, currency strategist at a leading investment firm, Mrs. Kemi Lawson, noted that rising external reserves have enhanced the CBN’s ability to manage volatility.
“With reserves improving, the central bank has more room to smooth sharp movements in the market, which reassures investors and discourages speculative attacks on the naira,” she said.
Analysts also pointed to structural reforms such as the introduction of the Electronic Foreign Exchange Matching System, which has improved price discovery, governance and transparency in FX transactions. The reforms have helped narrow the gap between the official and parallel market rates, reducing arbitrage opportunities.
Despite the positive momentum, economists cautioned that sustaining the naira’s rally will depend on broader macroeconomic conditions.
Oil prices, which remain a major source of foreign exchange inflows for Nigeria, will continue to play a critical role, alongside consistent inflows from trade, remittances and foreign investment.