The Naira gained value, trading at N1,492.49 against the Dollar, reflecting a 0.44 percent increase due to CBN reforms. Analysts praise the CBN’s efforts, but Professor Jonathan Aremu warns increased production is necessary to sustain gains. Cordros Securities notes reduced demand pressure amid declining foreign exchange reserves. The CBN is expected to stabilize the Naira during periods of volatility.
The Nigerian Naira exhibited an appreciation in the official market on Friday, trading at N1,492.49 against the Dollar, reflecting a gain of N6.57 and a 0.44 percent increase from Thursday’s N1,499.07. Wednesday’s trading concluded at N1,499.11, indicating a period of relative stability for the Naira in light of recent Central Bank of Nigeria (CBN) reforms aimed at enhancing transparency in the Foreign Exchange (FX) market.
Analysts have commended the CBN for the Naira’s steady progress since December 2024. However, Professor Jonathan Aremu, a former CBN Director and current Professor of International Economic Relations at Covenant University, cautioned against premature celebration. He stressed that while the Naira’s steady appreciation is encouraging, recent fluctuations highlight the need for sustained economic production to maintain stability.
In an interview with the News Agency of Nigeria (NAN), Aremu emphasized the importance of increasing production capacity to support the Naira’s gains. He pointed out that simply managing money supply without facilitating economic transactions would hinder the expected appreciation. Aremu noted that a robust supply of goods and services is crucial, as actual availability is often limited by market conditions.
Moreover, Cordros Securities attributed the Naira’s recent appreciation to diminished demand pressure despite a continuing decline in foreign exchange reserves. As of February 27, FX reserves had decreased by $241.50 million to $38.46 billion, marking a seventh consecutive week of decline. The report indicated expectations for stable FX liquidity, supported by improved market efficiency and confidence.
The CBN is projected to provide support during highly volatile periods, maintaining the Naira’s stability in the coming term. The emphasis remains on fostering a more resilient economic environment where production can flourish, ultimately strengthening the Naira against foreign currencies.
In conclusion, the Naira’s recent appreciation against the Dollar reflects the positive impact of CBN reforms aimed at stabilizing the foreign exchange market. However, experts like Prof. Aremu caution against over-celebration, advocating for increased production as a means to sustain these gains. As foreign exchange reserves decline, ongoing support from the CBN will be essential for ensuring continued stability in the market.
Original Source: nannews.ng
