Nigerian Naira Stabilizes Despite Slight Weakening at Official Window

The Nigerian naira has continued its recent trend of stability, despite a slight weakening at the official window. At the beginning of the week, the spot rate was quoted at N1,329.5138, but it dropped to N1,330.0965 due to increased demand for the US dollar. This pressure on liquidity in the forex market has led to a widening gap between the official and parallel markets.

The naira dipped 13.50% to N1,555.00 at the informal FX market, increasing the gap to about N225 from N41. Some fintech apps quoted the exchange rate at N1362 on Friday, with several selling US dollars at that rate or higher.

However, analysts point out that the naira has seen a series of positive movements recently, reflecting improved liquidity in the foreign exchange market. With robust FX supply covering US dollar demand, the local unit gained about N3.80 per greenback in September. The credit rating upgrades and growing foreign interest in the economy have also contributed to this trend.

Nigeria's external reserves increased marginally by 0.07% week-on-week to $54.92 billion. This accumulation provides an additional buffer for the external sector and supports confidence around the naira, according to Cowry Asset Limited.