The Centre for Promotion of Private Enterprise (CPPE) has credited the recent significant appreciation of the naira against the dollar to Nigeria’s growing external reserves and strategic interventions by the Central Bank of Nigeria (CBN).
The Director of CPPE, Muda Yusuf, highlighted these factors in a statement on Sunday, emphasizing the impact of reforms in the foreign exchange (FX) market.
The naira closed last week at ₦1,535/$, marking a remarkable improvement of ₦127 from its position at ₦1,660/$ on the preceding Monday. This upward trend comes amid broader efforts to stabilize the currency and attract foreign investment.
Nigeria’s external reserves have surpassed the $40 billion mark, a development that Yusuf described as a major factor in bolstering the naira’s strength. The increase in reserves enhances the CBN’s ability to intervene in the FX market effectively.
Yusuf noted: “The rise in reserves implies greater capacity for the CBN to stabilize the naira. These interventions, combined with increased foreign exchange inflows from international money transfer operators, have significantly strengthened the currency in recent weeks.”
The introduction of the Electronic Foreign Exchange Matching System (EFEMS) has also been instrumental. The platform, launched in early December, facilitates smoother trading and enhances transparency in the FX market.
Yusuf pointed out that foreign exchange market reforms over the past few months have led to a surge in autonomous FX inflows. This, coupled with the federal government’s successful $2.2 billion Eurobond issuance, has elevated investor confidence in Nigeria’s economy.
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“The strengthening of the naira reflects increased investor confidence, supported by stable reserves and improved inflows from external sources. These factors signal a positive trajectory for the currency,” Yusuf added.
Economic experts have echoed CPPE’s analysis, stressing the importance of sustainable policies to maintain the naira’s momentum. Dr. Chijioke Obiora, a currency strategist, remarked:
“The current gains in the naira are a result of both domestic reforms and external achievements, such as the Eurobond issuance. However, the challenge lies in ensuring these gains are not eroded by speculative trading or inconsistent policies.”
Financial analyst Funmi Adeyemi highlighted the role of transparency in FX operations:
“The EFEMS platform has ushered in a new era of accountability, which has been critical in stabilizing the naira. Continued implementation of such reforms will be key to long-term stability.”
While the naira’s recent rally has brought optimism, experts caution against complacency. Yusuf urged the federal government and the CBN to sustain reforms and ensure that Nigeria’s FX market remains competitive and transparent.
“The strengthening of the naira is a welcome development, but it must be supported by broader economic stability and consistent policy implementation to maintain investor confidence,” Yusuf concluded.