Naira Appreciates to N1,367/$ in First Trading Session of May

The naira strengthened to N1,367.5 per dollar at the official market in the first trading session of May, extending gains recorded in the previous month amid improving conditions in the foreign exchange market.

Data released by the Central Bank of Nigeria showed that the local currency appreciated after closing April at N1,374/$, marking a continuation of its upward movement.

The latest performance represents a notable shift, as the currency had experienced sustained pressure in prior periods, with April ending on a positive note for the first time in recent years.

Market data indicates that the naira traded within a relatively narrow band during the session, reflecting reduced volatility and improved stability in the foreign exchange market.

The currency recorded an intraday range between N1,362/$ and N1,374.5/$, while the average exchange rate stood at N1,365.89/$.

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The appreciation also reflects an improvement from earlier levels in April, when the currency traded at about N1,376/$, following a March close of N1,387/$.

Analysts attribute the strengthening of the naira to relatively stable trading conditions, improved liquidity, and a more balanced demand-supply dynamic in the market.

“The modest appreciation reflects improved market sentiment and relatively stable trading conditions in the foreign exchange market,” a market analyst said.

The development comes against the backdrop of mixed global currency movements, with the U.S. dollar maintaining strength on safe-haven demand driven by ongoing geopolitical tensions.

Despite global uncertainties, the naira’s performance suggests a degree of resilience in the domestic market, supported by policy measures and improved market confidence.

Further data indicates that the currency’s performance in April marked a departure from previous trends, where it had consistently weakened during the same period in earlier years.

The naira had initially depreciated at the start of April before gradually strengthening toward the end of the month, with the gains extending into early May.

Market participants noted that reduced volatility and improved liquidity contributed significantly to the currency’s stability during the period.

However, underlying pressures remain evident, particularly in the country’s external reserves position.

Nigeria’s foreign reserves declined to $48.36 billion as of the end of April, compared to $49.18 billion at the beginning of the month, highlighting ongoing challenges in sustaining foreign exchange supply.

Analysts note that while the appreciation of the naira is a positive signal, the decline in reserves underscores the need for sustained inflows to support long-term currency stability.

Globally, currency markets continue to exhibit volatility, influenced by geopolitical developments and monetary policy expectations in major economies.

The Japanese yen remained relatively stable amid lingering concerns over possible intervention by authorities, while the U.S. dollar maintained its strength due to increased demand for safe-haven assets.

The euro traded at approximately $1.1693, while the British pound hovered around $1.353, reflecting moderate movements in major currency pairs.

The dollar index also remained firm at 98.452, extending gains from the previous session, as investors continued to seek safety amid global uncertainties.

Meanwhile, the Australian dollar traded near $0.7168 ahead of an anticipated policy decision by the Reserve Bank of Australia, where expectations of further interest rate hikes have shaped market sentiment.

Domestic analysts maintain that the naira’s performance in the early part of May reflects improved confidence in the foreign exchange market, although sustaining the gains will depend on continued policy support and increased foreign exchange inflows.

They also note that structural factors, including export performance and capital inflows, will play a critical role in determining the currency’s trajectory in the coming months.

The Central Bank’s ongoing reforms, aimed at improving transparency and efficiency in the foreign exchange market, are expected to further influence market dynamics.

Market participants will continue to monitor developments in both domestic and global markets, as external shocks and policy shifts remain key drivers of currency movements.

The naira’s early gains in May provide a positive signal for the market, but analysts caution that maintaining stability will require sustained efforts to address underlying supply constraints and enhance market confidence.