Naira Soars to Two-Year Peak as Dollar Plummets by N83 in Official Market
The Nigerian naira has achieved a significant milestone, appreciating to N1,347.78 per US dollar at the official foreign exchange market on Monday, February 16. This marks the currency's highest level in two years, representing a notable strengthening trend in recent weeks.
Dollar Crashes by Over N83 Since January Opening
The latest exchange rate indicates that the US dollar has crashed by more than N83 compared to its opening rate of N1,430 at the beginning of the year. This substantial decline reflects improved market conditions and growing confidence in Nigeria's currency management policies.
Data from the Central Bank of Nigeria shows the naira gained N7.64, equivalent to a 0.57% appreciation, from the previous rate of N1,355.42 recorded on Friday at the Nigerian Foreign Exchange Market. The currency's performance demonstrates consistent upward momentum in the official trading window.
Naira Strengthens Against Multiple Global Currencies
The appreciation wasn't limited to the US dollar alone. The naira recorded gains against other major global currencies in the official market:
- Against the British Pound Sterling: Appreciated by N5.41 to trade at N1,839.18/£1 from N1,844.59/£1
- Against the Euro: Gained N9.78 to close at N1,598.06/€1 compared with N1,607.93/€1
- Against the Chinese Yuan/Renminbi: Traded at N195.07
- Against the Pound Sterling: Maintained at N1,839.18
Market Spread Narrows Significantly as Stability Returns
The spread between the official and parallel markets has narrowed dramatically to approximately 2.5%, representing roughly N35 difference. This contrasts sharply with the more than 6% spread, equivalent to N92, recorded just last week. The reduced gap indicates improved market efficiency and reduced arbitrage opportunities.
In the parallel market, also known as the black market, the naira traded around N1,390 per dollar on Monday morning. Some traders later quoted it unchanged at N1,420 per dollar, showing some variation in unofficial market pricing throughout the trading day.
Expert Anticipates BDC Trading Guidelines Release
Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria, confirmed that operational guidelines for the commencement of Bureau De Change trading would be released within the week. "The operationalisation guidelines will be released within the week for the takeoff of trading," Gwadabe stated in an exclusive interview.
The expected guidelines from the Central Bank of Nigeria are seen as a crucial factor contributing to the naira's recent strength, alongside improved liquidity conditions in the foreign exchange market.
External Reserves Boost Supports Currency Gains
Nigeria's gross external reserves increased by $135.76 million day-on-day to reach $47.81 billion, providing additional support for the naira's appreciation. The growing reserves enhance confidence in the country's external position and contribute to the currency's stability against global counterparts.
At Guaranty Trust Bank's forex counter, the naira experienced a slight weakening of N2 to N1,367 per dollar from N1,365 previously, showing some variation across different trading platforms despite the overall positive trend.
Naira Among African Currencies Expected to Extend Gains
Financial analysts project that the naira will continue its strengthening trend alongside other African currencies. Zambia's kwacha is also expected to remain strong, supported by improving macroeconomic conditions and resilient copper prices, which represent the country's key export commodity.
The convergence of official and parallel market rates, combined with anticipated regulatory clarity for BDC operators and growing external reserves, creates a favorable environment for sustained naira appreciation in the coming weeks.
