By Opeyemi Adelakun
The naira strengthened against the United States dollar last week, supported by improved foreign exchange supply and increased liquidity in the market.
The local currency closed at N1,346.49 per dollar in the official market, gaining N11.11 during the five trading days under review, according to data from the Central Bank of Nigeria.
The latest movement represents a 0.83 per cent appreciation from the previous week, as increased dollar availability eased pressure on the naira.
The currency also recorded a marginal improvement in the parallel market, where it closed at N1,400.61 per dollar amid relatively balanced demand and supply.
Market sources indicated that foreign investors, exporters and non-bank corporates contributed to the increased dollar liquidity during the week.
The improvement in the foreign exchange market coincided with a rise in Nigeria’s external reserves, which increased by 0.65 per cent to $52.657bn.
The stronger reserves position provides additional support for the country’s external liquidity and could help sustain the recent relative stability of the naira if improved foreign exchange supply is maintained.
Market participants have expressed optimism about the currency’s outlook, with some projections putting the exchange rate at around N1,350 per dollar by the end of 2026.
Meanwhile, developments in the global oil market could also influence Nigeria’s external position, given the country’s dependence on crude oil exports for a significant portion of its foreign exchange earnings.
Brent crude rose by 0.61 per cent to $94.39 per barrel, while West Texas Intermediate increased by 0.23 per cent to $87.06 per barrel as of 6:07pm on Sunday.
Higher crude prices could potentially boost Nigeria’s export earnings and support its external reserves. However, continued geopolitical tensions, particularly involving major oil-producing regions, could trigger further volatility in global energy prices.
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