The Nigerian naira strengthened by N116.84 against the U.S. dollar due to increased dollar liquidity, closing at N1,539.65 in the official FX market. With a 7.59% rise, the surge in supply boosts import prospects and investor confidence, though concerns linger for exporters facing reduced international competitiveness.
The Nigerian naira gained significantly against the U.S. dollar on Wednesday, closing with an appreciation of N116.84, supported by increased dollar liquidity in the official foreign exchange market. The Naira rose by 7.59%, with the dollar quoted at N1,539.65 compared to N1,656.49 the previous day, according to FMDQ Securities Exchange Limited. The surge in dollar supply, with trading volume increasing by 38.94% to $139.48 million, was a key factor behind the naira’s improvement. The FX market saw fluctuations during the day, with the intraday high for the dollar at N1,670 and the low at N1,530.
The parallel market remained stable, with the naira holding at N1,660 per dollar. A stronger naira offers potential benefits for the Nigerian economy, including reduced import costs and lower inflationary pressures, which could benefit consumers and businesses reliant on foreign goods. It may also signal stability in the FX market, boosting investor confidence and encouraging foreign investments.
However, there are concerns that the naira's appreciation might hurt Nigerian exporters, as their goods could become more expensive in international markets, reducing their competitiveness. While this development is a positive sign for the short term, experts suggest monitoring the long-term effects closely, particularly about inflation and foreign investment.
