Naira gains ground, appreciating to N1,395/$ in parallel market

Nigeria's naira showed a notable appreciation against the U.S. dollar on Thursday, signaling a positive shift in the foreign exchange market. In the parallel market, the naira strengthened to N1,395 per dollar, up from N1,403 the previous day. This upward trend was also observed in the Nigerian Foreign Exchange Market (NFEM), where the indicative exchange rate fell to N1,370 per dollar from N1,371.4, marking a N1.4 appreciation.

The margin between the parallel and official exchange rates narrowed to N25 per dollar, a decrease from N31.6 recorded on Thursday. This convergence suggests a more unified and potentially more stable exchange rate environment. Despite the appreciation, the interbank turnover at the NFEM saw a slight decrease of 17.6 percent, falling to N70.4 million from N85.5 million the day prior.

Looking ahead, financial sector analysts anticipate the naira will maintain its stability in the coming week. This outlook is supported by expectations of continued improvement in foreign exchange liquidity and the maintenance of healthy external reserves. Cowry Asset Management Plc analysts noted that the naira is expected to remain relatively stable, bolstered by these positive market conditions.

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Looking ahead, the naira is expected to remain relatively stable, supported by improved foreign exchange, FX, liquidity and healthy external reserves.