The naira regained one-fifth of value in the past five weeks as increased foreign exchange inflows saw Nigeria’s forex reserves rising by $1.04 billion in the first quarter of this year.
The reserves, which had ended 2023 at $32.912 billion, closed weekend at $33.952 billion, an increase of $1.038 billion. The build-up of the reserves came within the same period the Central Bank of Nigeria (CBN) completed payment of forex backlog of $7 billion.
- Naira gains 6% at official market
- Okuama: Army declares Amagbem, Prof, six others wanted over killing of 17 soldiers
The naira rose by about 22 per cent in March to close at N1, 303.842 per dollar as against N1, 544.08 per dollar recorded at the end of the previous month. At the parallel market, the naira rose by about 20 per cent to close the month at N1,300 per dollar.
Analysts agreed that the forex reserves accretion and naira gain may continue in the period ahead as inflows remain upbeat.
Analysts at Financial Derivatives Company (FDC), Cordros Capital, Afrinvest Securities and Arthur Steven Asset Management, said they expected the naira to remain stable in the meantime, given the monetary stance of the CBN.
Managing Director, Financial Derivatives Company (FDC), Mr. Bismarck Rewane, said the current monetary stance suggests further stability in naira and increased investors’ confidence in the economy.
He noted that the high interest rate is expected to support investment inflows from portfolio investors, which combined with a quadruple in remittance inflows and rebounding oil and non-oil export earnings, will support external reserves.
“Essentially, the naira’s stability will continue amid higher interest rates,” Rewane said at the weekend.
He added that while it might still take some time for exchange rate gains to translate to reduced commodity prices in the open markets, “the future holds bright promises.”
Cordros Capital acknowledged CBN’s continuous efforts in the forex market, which are expected to keep the naira stable in the meantime.
Afrinvest stated that naira would remain stable and trade within similar band over the next weeks as the apex bank continues to attract more capital inflow.
