The naira ended the trading week on a strong note in the parallel market, appreciating to N1,520/$1 on Friday its best performance in recent weeks. This marks a significant gain compared to N1,550/$1 recorded on Tuesday, reflecting improved sentiment in the unofficial foreign exchange market.
The parallel rate also closed N14 stronger than the official market rate of N1,534/$1, as published on the Central Bank of Nigeria (CBN) website at the close of market on Thursday, July 18.
Week-on-Week Performance
Throughout the week, the naira showed a steady climb in the black market, trading at:
- N1,550/$1 on Tuesday
- N1,530/$1 on Wednesday
- N1,535/$1 on Thursday
- N1,520/$1 on Friday
Meanwhile, the official market remained relatively stable, with only minor fluctuations:
- N1,536/$1 on Tuesday
- N1,537/$1 on Wednesday
- N1,534/$1 on Thursday
This narrowing gap between the two markets is seen by analysts as a positive sign, potentially indicating improved investor confidence and more transparent forex dynamics.
Reserves Rise to $38.45 Billion
Adding to the optimism, Nigeria’s foreign exchange reserves rose to $38.45 billion, up from $37.78 billion the previous week a 1.77% increase. According to data from the CBN, this uptick strengthens the country’s ability to defend the naira, settle external obligations, and support critical imports.
Experts suggest that the increase in reserves is partly driven by higher crude oil earnings, improved non-oil exports, and the gradual return of foreign capital inflows.
CBN Governor Speaks on Forex Stability
Speaking at a press briefing in Abuja following the 301st Monetary Policy Committee (MPC) meeting on July 22, CBN Governor Olayemi Cardoso said recent forex market reforms are beginning to yield results.
“The MPC notes the sustained stability in the foreign exchange market, accentuated by improved capital flows, earnings from increased crude oil production, rising non-oil exports, and significant investments,” Cardoso said, as reported by Nairametrics.
“Very importantly, Nigerians are having greater confidence in their own currency,” he added.
He also pointed to the removal of fuel subsidies and reforms in the forex market as difficult but necessary decisions to restore macroeconomic stability.
“These measures, painful though they may be, have resulted in stability in the foreign exchange market. There is positivity in our trade surplus, and it has restored investor confidence,” Cardoso emphasized.
Key Decisions from the 301st MPC Meeting
At the MPC meeting, the apex bank retained the Monetary Policy Rate (MPR) at 27.5%, aligning with analyst expectations amid continued inflationary concerns. All 12 members of the committee voted unanimously.
Other key decisions include:
- Maintaining the asymmetric corridor at +500/-100 basis points
- Keeping the Cash Reserve Ratio (CRR) at 50% for Deposit Money Banks and 16% for Merchant Banks
- Holding the Liquidity Ratio steady at 30%
These moves reflect a cautious stance by the CBN in balancing growth with price stability, while continuing efforts to anchor inflation and exchange rate volatility.
Bottom Line:
The naira’s steady appreciation and rising forex reserves suggest that policy reforms by the CBN are starting to gain traction. However, sustained progress will require continued investor confidence, improved dollar inflows, and disciplined macroeconomic management.
