The naira’s recent rally against the US dollar, driven by Central Bank of Nigeria (CBN) reforms, has put dollar savers at risk of investment losses. Analysts warn that continued naira appreciation may further devalue dollar holdings. Experts urge investors to reassess strategies as Nigeria's forex policies reshape market dynamics.
The Nigerian naira has staged a significant recovery against the US dollar, fueled by economic reforms and improved market confidence. The currency's resurgence has raised concerns for Nigerians who had stored wealth in dollars, expecting a continuous depreciation of the naira.
Throughout February, the naira gained N145 against the dollar, strengthening from N1,640 to N1,495 at the parallel market. The official exchange rate also saw improvements, closing the month at N1,492 from its previous N1,620. This unexpected rally has prompted analysts to caution dollar holders against potential losses, urging them to offload their holdings.
Foreign exchange expert Michael Nwadike noted that while investors seek stability in dollar-denominated assets, the naira’s rebound presents new risks. He advised authorities to sustain this momentum by implementing pro-market policies that encourage foreign investment and economic stability.
Retired CBN Director Prof. Jonathan Aremu emphasized that boosting local production is key to maintaining the naira’s strength. He suggested that monetary policies alone would not ensure long-term stability unless they are accompanied by increased economic output.
CBN Governor Olayemi Cardoso highlighted the role of the Electronic Foreign Exchange Matching System (EFEMS) in enhancing market transparency and reducing speculative distortions. He reiterated that the naira’s current exchange rate does not reflect its true value, as desperation-driven transactions often skew pricing.
The broader economic landscape also appears promising, with inflation showing signs of easing following policy adjustments. Analysts expect continued market stabilization, particularly with increased local refining capacity from the Dangote Refinery, which could reduce Nigeria’s dependency on imported fuel and mitigate foreign exchange volatility.
While some remain skeptical about the naira’s long-term resilience, many see this recovery as a turning point in Nigeria’s foreign exchange dynamics. The coming months will determine whether these gains can be sustained or if the market will revert to past trends
