Market News

By Bamidele Ogunwusi

Following the naira relative stability at the for­eign exchange market in the last two months, experts have projected that it will soon gain trac­tion and that there will be improved diaspora remittances.

The naira has been hovering between N1450 and N1500 at the foreign exchange market during this review period, they said.

These improvements, Daily Independent learnt, are not unconnected with the giant strides recorded by Oluyemi Cardoso’s lead­ership as the governor of the Central Bank of Nigeria (CBN). Cardoso became the governor of the apex bank about fifteen months ago.

Cardoso, on his assumption of office, met the naira in its worst state after the Federal Government removed petrol subsidy and floated the naira.

Nigeria’s battered curren­cy has lost 70 percent against the dollar since authorities relaxed foreign exchange con­trols in 2023, including a steep depreciation 12 months ago.

A year after an eye-water­ing slide against the dollar, the naira is enjoying a rare run of stability and analysts expect it to last.

A report by Bloomberg confirmed that the naira’s performance since December tells a different story, with the naira holding in a narrow range roughly between 1,550 and 1,520 per dollar.

“We’re quite bullish on the naira, and we think that the naira can stabilise at 1,500, but potentially even stronger,” Deutsche Bank’s chief South African and sub-Saharan Af­rica economist Danelee Masia told Bloomberg Television’s Jennifer Zabasajja.She noted Nigeria had raised dollar reserves, citing the $2.2 billion Eurobond it sold on December 2, while cau­tioning it remains vulnerable to the price of crude.

The naira’s slide was a de­liberate result of relinquish­ing its longstanding fixed peg against the dollar after Presi­dent Bola Tinubu took office in May 2023.

The deliberate slide, ac­cording to investigations, was meant to make investments attractive to foreign investors.

One other significant rea­son for the stability of the nai­ra is that the CBN took a bold step of active participation in the foreign exchange market to add liquidity to the system.

Though analysts do not see the intervention as the reason for the stability, it cannot be completely proven that it is not an important measure, according to Cyril Amaka, an economist.

He said, “Let me say here that Nigeria’s economy has defiled textbook theories and as a result of this, there is the need for the managers to think outside the box. One of the sources of thinking outside the box is the steady interven­tion of the CBN in the foreign exchange market.

“And since then, remark­able progress has been made”.

Ayo Salami, chief invest­ment officer at Emerging Mar­kets Investment Management Ltd. in London, said monthly dollar inflows into Nigeria were at $2.5 billion from for­eign direct investment, versus the Central Bank of Nigeria’s supply of $280 million.

“With most of the flows in the forex market coming from non-CBN-related sources, I think it would be reasonable to consider the current FX rate as real,” he said, arguing that Nigeria’s high interest rates are attractive to offshore capital.

“If rates remain above 15 percent, this is likely to be suf­ficient to retain the FDI flows and keep the forex rate stable,” he said, adding that current naira levels around N1,550 per dollar “is a reasonable reflec­tion of supply and demand.”

The remittances space has recorded remarkable growth and this is attributable to pol­icy measures introduced by the CBN to enhance liquidity in Nigeria’s foreign exchange market.

These measures include granting licences to new In­ternational Money Transfer Operators (IMTOs), imple­menting a willing buyer, will­ing seller model, and enabling timely access to naira liquidity for IMTOs.

After a downturn in 2023, remittance inflow through the International Money Transfer Operators (IMTOs) recovered strongly in 2024, a report by FBNQuest says.

The report, titled, ‘A surge in IMTO inflows’, attributed the surge to the CBN’s initia­tives, including revised guide­lines and a streamlined regu­latory framework, which have created a more favourable environment for remittance companies.

“One such initiative was the removal of limits on exchange rates quoted by IMTOs, allow­ing for more market-reflective rates”, the report said