The naira strengthened against the US dollar this week, closing at ₦1,600 per dollar in Nigeria’s official foreign exchange market, supported by a significant increase in the country’s dollar reserves, which have hit a 27-month high of $39.20 billion. This boost in reserves has enhanced liquidity in the currency market, helping the naira gain 3.2% during the week and allowing it to close positively despite intermittent dips.
Analysts attribute the naira’s rise to subdued seasonal demand for foreign currency, along with increased foreign investments, which bolstered Nigeria’s gross reserves. These reserves, last recorded at this level in July 2022, are crucial in maintaining market stability and meeting import demands.
In the parallel market, the naira saw fluctuations, ending the week at ₦1,740 per dollar, down from ₦1,725 earlier in the week. Commodity markets experienced volatility, with Brent crude dipping by 1% to $74.22 per barrel due to slowing economic growth in Europe and ongoing tensions in the Middle East. Meanwhile, gold prices surged by nearly 1% to $2,747.80 per ounce as investors turned to safer assets amid geopolitical uncertainties.
Experts remain cautiously optimistic about the naira’s stability as Nigeria heads into 2024, though the currency’s performance will be closely monitored as global economic conditions and geopolitical events continue to influence the markets.
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