Naira Strengthens Against Dollar as Nigeria’s External Reserves Surpass $54 Billion

Naira Strengthens Against Dollar as Nigeria’s External Reserves Surpass $54 Billion

The Nigerian naira appreciated against the US dollar in the official foreign exchange market on Friday, closing at N1,321 per dollar.

Data from the Central Bank of Nigeria (CBN) daily FX update showed that the spot rate opened at N1,337.2872 per dollar, slightly lower than the previous figure of N1,337.2873.

The naira recorded a week-on-week gain of 1.22%, supported by sustained foreign exchange inflows and improved market sentiment regarding the CBN’s external buffer to cushion against economic shocks.

Nigeria’s gross external reserves crossed the $54 billion threshold following a series of FX inflows from various global sources, with remittances and hydrocarbon revenue receipts serving as key contributors.

Elevated crude oil prices have strengthened the fiscal position of Africa’s largest oil producer.

Global crude prices continued their upward trend throughout the week, positioning the market for a significant weekly gain as ongoing conflicts in the Middle East raised concerns over potential disruptions to global oil supply.

Brent crude traded at $95.55 per barrel, while West Texas Intermediate (WTI) stood at $91.53 per barrel at the close of the week. Analysts anticipated further price increases amid escalating tensions between the United States and Iran.

Oil prices remained high as Iran and the United States exchanged missile strikes during the week. Additionally, Israel’s Defence Minister threatened “crippling” attacks on Iranian infrastructure, encompassing military, civilian, and energy facilities.

Meanwhile, Bonny Light crude rose by 11.12% to reach $102.54 per barrel, reflecting the broader surge in global crude prices.

Investment firm Cowry Asset Limited stated in a note: “We expect the near-term outlook to remain cautiously positive, with the naira likely to retain support from improved FX liquidity, rising external reserves, and elevated crude oil prices.”

Analysts cautioned that heightened geopolitical tensions are likely to sustain volatility in oil prices, while persistently high energy costs could exacerbate domestic inflationary pressures.

Overall, stronger oil revenues are expected to continue bolstering Nigeria’s external position and create a supportive environment for the naira in the near term.

Given the favorable forex market dynamics for the local currency, Broadstreet has adopted a more optimistic stance on the naira’s outlook, projecting a year-end exchange rate of N1,300.

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