Naira Sustains Stability Below 1,500/$ For 10 Consecutive Days

Nigeria’s foreign exchange market has witnessed a rare period of calm as the naira maintained its value below the ₦1,500 per dollar threshold for ten consecutive trading days. The development has been received with cautious optimism by businesses, investors, and policymakers, who view it as a sign of renewed stability in the foreign exchange system after months of extreme volatility.

Market data shows that the naira traded steadily between ₦1,470 and ₦1,495 across the official and parallel markets, marking the first extended period of relative calm in the currency market since the Central Bank of Nigeria (CBN) intensified its reforms earlier this year. The CBN’s ongoing measures, including increased liquidity injections, improved supply of foreign exchange, and tighter oversight of Bureau De Change (BDC) operators, have been credited for the improved market sentiment.

The apex bank has also strengthened monitoring of speculative trading, which in recent months has been a major factor driving the currency’s fluctuations. By reining in market manipulation and enhancing transparency in official transactions, the CBN has been able to restore some degree of confidence among participants. This has eased pressure on the naira and allowed it to consolidate gains.

Analysts point to the CBN’s intervention in clearing backlogs of foreign exchange demand as another critical factor. By addressing the longstanding arrears owed to foreign airlines, manufacturers, and other multinationals, the bank has reduced pressure on the spot market. The inflows from foreign portfolio investors, drawn by higher yields on government securities, have further boosted liquidity and supported the currency’s position.

Despite the positive trend, economists warn that the stability is still fragile and may not yet indicate a long-term recovery. Nigeria’s foreign reserves, though marginally improved, remain vulnerable to global oil price fluctuations, as crude exports account for more than 80 percent of foreign exchange earnings. Any shock in global oil markets could quickly reverse the recent gains.

Inflationary pressures also pose a threat to currency stability. With headline inflation still above 30 percent, Nigeria’s economy remains under strain, limiting the CBN’s policy flexibility. While higher interest rates have succeeded in attracting foreign capital inflows, they have also increased borrowing costs for domestic businesses, dampening growth prospects.

For manufacturers and import-dependent sectors, the naira’s relative stability offers some relief. Over the past year, sharp swings in exchange rates had disrupted business planning and forced companies to either halt operations or raise prices to unsustainable levels. A steadier exchange rate allows firms to better forecast costs, negotiate contracts, and maintain production.

On the consumer side, the effects of currency stability may take longer to be felt. Prices of goods and services, already pushed up by inflation and previous naira depreciation, remain high in local markets. Analysts caution that without consistent stability over several months, importers may be reluctant to lower prices, fearing a possible reversal.

The financial markets have also responded positively to the development. Equities on the Nigerian Exchange (NGX) recorded renewed investor interest, with analysts attributing part of the gains to increased confidence in foreign exchange stability. Similarly, bond markets have seen improved subscription rates as investors bet on sustained reforms by the CBN.

International observers, including rating agencies and multilateral lenders, are monitoring the situation closely. Currency stability is a critical factor in assessing Nigeria’s creditworthiness and overall investment climate. A prolonged period of calm in the FX market could improve the country’s rating outlook, making it easier to attract foreign direct investment (FDI) and concessional loans.

However, the challenge remains in sustaining the gains. Analysts recommend that beyond short-term interventions, the government must address structural weaknesses in the economy. Diversifying export earnings, boosting local production, and reducing dependence on imports are seen as essential steps toward achieving long-term stability in the currency market.

The private sector has echoed these concerns, emphasizing the need for consistent policy direction. Business leaders argue that while CBN’s measures are commendable, they must be complemented by fiscal policies that support industrial growth, energy supply, and infrastructure development. Without these, they warn, the naira may struggle to sustain its current levels.

There is also a push for improved transparency in the foreign exchange system. Stakeholders believe that publishing more detailed data on FX inflows, demand, and allocations will boost market confidence and deter speculation. They argue that for the naira to maintain credibility, participants must be assured of fairness and predictability in the system.

In the meantime, Nigerians are watching the naira closely as it continues its ten-day run below ₦1,500 per dollar. While the achievement is noteworthy, the true test lies in whether this stability can extend into the coming months and translate into tangible improvements in prices, investment inflows, and overall economic growth.

The coming weeks will be crucial as global oil prices, foreign investor sentiment, and domestic inflation trends converge to shape the naira’s trajectory. For now, the currency’s resilience offers a glimmer of hope in an economy struggling with multiple headwinds, but sustaining this progress will require a careful balance of monetary discipline and broader economic reforms.