At Wednesday’s close, the naira appreciated by 0.16%, reaching 1530.52/$, up from 1532.93/$ in the previous session. The Central Bank of Nigeria (CBN) data revealed the naira traded between 1545/$ and 1500/$, with the latter being lower than Tuesday’s rates.
Parallel Market Holds Steady
In the parallel market, CardinalStone Research reported no change in the naira’s value at 1,585.00/$. This caused a wider spread for speculative traders. Analysts noted that the gap between official and parallel market rates shrank to 3.07% from 3.40% earlier in the week.
Signs of Stabilization in the Market
Despite slight depreciation, analysts believe the market is stabilizing. Structural reforms and increased forex inflows are contributing to this trend. Tilewa Adebajo, CEO of CFG Advisory, shared her views with FRONTPAGE. She pointed out that the new system, where everyone uses a single portal to exchange currencies, is fostering stability.
Changes in Currency Transactions
Adebajo noted that many people abroad now use apps to transfer money to Nigeria. These apps offer the official exchange rate and streamline the transfer process. This system has increased forex supply, which is helping stabilize the market. Adebajo emphasized that parallel market operators need to adopt this method to move towards price discovery.
Comercio Partners Express Optimism
Comercio Partners praised the naira’s stability, citing its movement within the N1,450-1,550 range. This has also helped keep import costs in check. However, they cautioned that maintaining this stability will depend on consistent policies and continued forex inflows. They stressed that Nigeria’s long-term stability relies on these factors.
Forex Outlook and Potential Risks
CardinalStone experts echoed these thoughts, noting that the FX rate has been stable since the year began. Increased foreign inflows, a positive current account position, and CBN efforts have contributed to this stability. However, risks remain, especially with the possibility of weaker global crude oil prices. This could threaten Nigeria’s forex stability and raise inflation concerns.
Impact of Falling Oil Prices
Brent crude prices have declined by 5.5% year-to-date. This is driven by expectations of rising global crude supply and weakening demand. The U.S. has ramped up oil production, leading to a revised 2025 forecast of 13.61 mbpd. Additionally, OPEC+ plans to ease 2.20 mbpd in production cuts starting in April 2025. This may increase supply and put downward pressure on oil prices.
Challenges to Nigeria’s Forex Stability
With declining oil prices and potential supply increases, Nigeria’s forex stability remains vulnerable. Analysts warn that external shocks, like fluctuations in oil prices, could undermine the recent progress. The naira’s outlook is highly dependent on both domestic policies and external factors such as oil market dynamics.
