The Nigerian naira has recorded a remarkable upswing against the British pound sterling, with the European currency crashing below the N2,000 threshold across both official and parallel foreign exchange markets.
Market Performance Breakdown
Recent market checks reveal that the British pound has experienced a significant depreciation against the naira, closing the exchange rate gap that previously existed between different market segments. Data from the Central Bank of Nigeria indicates that as of Wednesday, November 12, the naira exchanged at N1,901.40 per pound sterling in the Nigerian Foreign Exchange Market (NFEM).
This represents a substantial improvement from the rates exceeding N2,000 recorded just weeks earlier, signaling a positive trend for the local currency. The convergence between official and parallel market rates suggests growing stability in Nigeria's foreign exchange ecosystem.
Parallel Market Reaction
In the parallel market, commonly referred to as the black market, the British pound sterling has similarly dropped below the psychological N2,000 barrier. Currency traders confirmed the naira's improved performance, with one BDC operator, Abdullahi, providing specific rates.
The black market recorded a buying rate of N1,885 per pound and a selling rate of N1,910 per pound, indicating narrowed spreads and improved market efficiency. Traders expressed optimism about the continuing positive trajectory, with some predicting further pound depreciation in coming weeks.
Dollar Performance and Market Dynamics
While the naira demonstrated strong performance against the pound, its movement against the US dollar showed mixed results. The local currency experienced a slight depreciation of N1.42 or 0.09% to settle at N1,438.71 per dollar on Tuesday, compared to N1,437.39 per dollar the previous day.
In the GTBank FX counter, the naira declined by N2 to close at N1,444 per dollar versus the preceding session's rate of N1,442 per dollar. However, the parallel market maintained stability against the American currency at N1,455 per dollar.
CBN Reforms Driving Stability
The Central Bank of Nigeria's ongoing reforms have been instrumental in stabilizing the naira exchange rate across all market segments. Despite a 14 percent drop in foreign exchange inflows to $899 million last week from $1.04 billion the previous week, analysts maintain a positive outlook on currency stability.
The sustained intervention by the CBN, coupled with a steady increase in external reserves which climbed to $43.366 billion from $43.348 billion, provides fundamental support for the naira's continued stability.
Customs Duty Rate Adjustment
In a related development aimed at reducing import costs, the Central Bank has downwardly adjusted the customs exchange rate to N1,546.86 per dollar. This revision, visible on Nigeria's trade portal, effectively lowers the expense of importing goods into the country.
The apex bank clarified that the new rate will remain effective until import transactions and clearance processes are completed by importers, providing cost certainty for businesses engaged in international trade.
The coordinated measures by monetary authorities appear to be yielding positive results, with the naira showing resilience and reduced volatility in recent trading sessions. Market participants will continue monitoring these developments as Nigeria's economic reforms progress.
