Market News

The naira firmed on both sides of the market yesterday closing at N1,410 to dollar at the parallel market and N1,350 to dollar at the official window.

This represents N60 to dollar gap between the official and parallel market rates.

On Monday, the local currency had closed at N1,415 to dollar at the parallel market, and N1,385.25 to dollar at the official window.

Yesterday’s performance represents N5 to dollar and N35.25 to dollar appreciation at both markets, respetively.

The local currency also traded flat against the British Pounds, closing at N1,910 to Pounds Sterling on Monday and Tueday.

In emailed note to investors released yesterday, Financial Derivatives Company Limited led by economist, Bismark Rewane, said the naira has continued to firm at both sides of the market even as the gap widened to N60 to dollar.

Rewane also said that Brent rose for a third straight session on Tuesday, trading above $91 a barrel after settling at $90.87 on Monday, its highest since late July.

“The 60-day memorandum of understanding signed on June 17, meant to buy time for a nuclear deal and reopen the Strait of Hormuz, expired without replacement: President Trump said he was not interested in an extension and Tehran ruled out talks to prolong it.”

“Iran and Oman continue to negotiate a protocol for managing traffic through the strait, which normally carries about a fifth of the world’s seaborne oil and LNG, but Washington is not at that table,” he said.

According to Rewane, the price at which crude oil is sold matters so much to Nigeria because an increase in crude oil prices, supported by steady domestic oil production, could lift export inflows, keep reserves buoyant and in turn sustain the naira’s stability. 

He explained that the naira’s positive performance at the official market will continue to bolster investor sentiment, keeping capital inflows steady in the near term.

“For Nigeria, while this is good 

 news for the capital and current account balances, the volatility and swings in oil prices, and the attendant increase in domestic petrol prices, are likely to keep inflation pressures high. Though the headline print eased in July, the expected increase in logistics, transportation and domestic fuel costs will continue to push food prices up, raising standard of living risks,” he said.

In 2023, the new administration and the Central Bank of Nigeria (CBN)-led by its Governor, Olayemi Cardoso liberalised the foreign exchange market, stopped central bank financing of the fiscal deficit, and reformed fuel subsidies. The government also strengthened revenue collection and took strategic steps to reduce surging inflation rate. 

NigerianEconomic Reports

Since these reforms were implemented, international reserves have increased, and people can now access foreign exchange in the official market.

Besides, Nigeria successfully returned to international capital markets last December and was recently upgraded by rating agencies.