The naira strengthened by N1.31 against the US dollar at the official Nigerian Foreign Exchange Market (NFEM) on Wednesday, September 30, closing at N1,329.16/$1, according to data from the Central Bank of Nigeria (CBN). The appreciation, which represents a 0.09% gain, came as trading activity surged, with interbank market turnover jumping 122.9% to $179.577 million from $80.582 million previously. The number of deals executed also rose sharply to 94 from 37, indicating heightened liquidity in the market.
Naira Performance Against Pound and Euro
While the naira gained against the dollar, it weakened against other major currencies. The local currency depreciated by N5.97 against the British pound sterling, closing at N1,766.59/£1 compared with N1,760.62/£1 on Tuesday. Similarly, against the euro, the naira lost 50 kobo to close at N1,510.06/€1, down from N1,509.56/€1 in the previous session.
At the parallel market, the naira remained stable at N1,370/$1, while GTBank's foreign exchange desk held its rate at N1,338/$1. The stability in these segments contrasted with the official market's gain, reflecting a mixed trading environment.
CBN Reports $40bn Net Usable External Reserves
The CBN disclosed that Nigeria's net usable external reserves have risen to about $40 billion, a significant improvement from the $859 million recorded in 2023 when the current administration assumed office. This figure was below the amount required to cover one month of the country's import obligations at the time, according to the apex bank.
Muhammad Abdullahi, Deputy Governor of Corporate Services at the CBN, revealed these figures on Tuesday at the opening of the 38th Seminar of Finance Correspondents and Business Editors in Abuja. Abdullahi attributed the increase to reforms implemented by the CBN, which have strengthened the country's external position over the past three years.
Net usable external reserves refer to foreign exchange available for immediate use after accounting for known short-term obligations. This differs from gross foreign exchange reserves, which represent the broader stock of foreign assets held by the country.
Gross Reserves and Monetary Policy Shifts
Nigeria's gross foreign exchange reserves rose to about $54.6 billion in mid-September, the highest level in more than 18 years. This improvement has provided the CBN with greater capacity to manage short-term pressure in the foreign exchange market, according to data from the central bank.
The naira's performance also comes amid a shift in the CBN's monetary policy stance. The Monetary Policy Committee recently reduced the Monetary Policy Rate by 350 basis points to 23.0%, marking a significant easing of the benchmark interest rate. This combination of stronger external reserves, increased foreign exchange market activity, and recent monetary policy changes continues to shape conditions in the naira market.
