Naira Rallies to Two-Year High at ₦1,347/$ as FX Liquidity Improves
The naira has climbed to one of its strongest levels in nearly two years, closing at ₦1,347.78 per dollar in the official market, amid improving foreign exchange liquidity and sustained foreign portfolio inflows.
According to a recent macroeconomic update by CardinalStone, the local currency has appreciated by 6.9 per cent year-to-date in the official window, marking a sharp rebound after months of volatility.
The report attributed the rally to improved liquidity conditions in the official foreign exchange market, supported by renewed policy interventions and stronger capital inflows. Analysts say the strengthening trend signals increased confidence in Nigeria’s FX management framework, though risks remain.
Official–Parallel Market Gap Narrows
Despite the gains, the spread between the official and parallel markets persisted. At one point, the parallel market traded at a 5.7 per cent premium over the official rate. However, the margin later narrowed to about 3.2 per cent following fresh foreign exchange interventions by the Central Bank of Nigeria (CBN).
CardinalStone noted that the narrowing gap suggests improved liquidity in the official market compared to the parallel segment. “There was more liquidity in the official window than in the parallel market,” the report stated.
Profit-Taking Risk Looms
While the appreciation reflects stronger FX supply dynamics, the investment firm cautioned that rising foreign portfolio inflows could expose the currency to profit-taking pressures later in the year. Foreign investors, who typically respond quickly to global interest rate shifts and domestic policy signals, may exit positions if market conditions change.
Market watchers say the sustainability of the naira’s current strength will depend largely on continued FX inflows, disciplined monetary policy, and external factors such as global oil prices and US interest rate trends.
For now, the currency’s rebound offers temporary relief to businesses and importers who have struggled with high exchange-rate volatility over the past year, even as analysts urge cautious optimism about the outlook for the remainder of 2026.