After months of turbulence, the naira has shown signs of stability, settling around N1,500/$ after falling to N1,900/$ at its weakest.
While optimists view this as a sign that the Central Bank of Nigeria (CBN) policy interventions are working, skeptics argue that the currency’s long-term strength is far from restored,” TrustBanc Financial Group Limited said in a note.
“A major challenge remains speculative hoarding, which has long fuelled naira volatility. With speculators, hedgers, and policymakers locked in a battle, many are watching for signs of weakness that could trigger another wave of depreciation.
“So far, CBN’s tighter liquidity controls, improved dollar inflows, and stronger reserves have helped ease pressure on the naira. However, sustaining this momentum will require more than intervention—it demands fundamental structural reforms to ensure lasting forex market stability,” TrustBanc said.
Dr. Olusegun Adebayo, an economist at the Lagos Business School, stated: “The naira’s relative stability is largely due to improved transparency in forex policies.
The new trading framework introduced by the CBN late last year has enhanced price discovery and reduced speculative attacks on the currency.”
Investment analyst Bayo Ogunlana commented: “Foreign investor sentiment is improving, driven by higher yields on Nigerian bonds and a more predictable forex market. While risks remain, we are seeing more inflows, which should help sustain stability.
In February, the naira fell by 1.69 per cent in the official market but rose by 7.33 per cent in the parallel market, bringing its year-to-date gain to 2.48 per cent and 9.67 per cent in the official and parallel markets, respectively.
Due to sustained forex intervention, gross external reserves declined to $39.10 billion, while Brent crude oil prices traded lower at $75.02 per barrel.
The naira settled at N1500.15 per US dollar in the official market amidst sustained forex intervention. In the parallel market, the exchange rate fell by 33 bps, settling at N1505, and reducing forex gap to N5 per greenback.
The improved dollar liquidity helped alleviate pressure on forex demand. Market activity remained strong, with trades executed within the $/N1,495.00 to $/N1,505.00 range.
Analysts expect forex liquidity to remain robust as a more efficient market and improved market confidence continue to support inflows from autonomous sources.