The naira has strengthened steadily against the US dollar in recent weeks, with experts attributing the rebound to bold policy reforms, shifting consumer behavior, improved oil production, and renewed confidence in the foreign exchange (FX) market.
In an exclusive chat with Nairametrics, Zeal Akaraiwe, CEO of Graeme Blaque Advisory, cited the structural reforms that laid the groundwork for the naira’s recovery.
“We have to understand the impact of the market initiatives that started last year to strengthen the fundamental foundation of the FX market, which culminated with the launch of the BMatch system as well as the FX Code,” Akaraiwe said.
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According to him, these reforms created the right platform for improved liquidity, reduced pressure from demand, and stronger market fundamentals. He also pointed to the export season that runs from September to February, which injects more foreign exchange into the system, as well as improved oil production and reserve accretion.
“In addition, the increase in limits for the use of naira cards for FX transactions reduces pressure and creates a strong positive sentiment on the market. All of these put together make the strengthening of the currency inevitable,” he said.
Policy choices and behavioral shifts driving change
On Drinks & Mics, a financial talk show hosted by Ugo Obi-Chukwu, CEO of Nairametrics, finance experts, including Biodun Fagbolu (former CEO of CSL Stockbrokers), Tunji Andrews (CEO of Awabah), and Arnold Dublin-Green (Chief Investment Officer of Cordros Capital Ltd), cited policy choices and shifting consumer behavior as key drivers of the naira’s recent gains.
Biodun Fagbolu stressed that the turnaround could not be divorced from policy choices.
He said, “I think from a demand and supply point of view, there’s transparency in the FX markets. We’ve seen a lot of inflows on the OMO. Oil production has increased. On the supply side, Nigerians have also changed their consumption habits.”
He noted a visible shift in lifestyles: “Look at the number of Chinese cars versus our normal what we used to buy before as bankers. Now I know a lot of banks and a lot of institutions who, they’re senior people, you know, you’ll buy the big cars, the Range Rovers, the Land Cruisers, and everything.
“People have scaled down. In fact, a lot of banks are not even giving their senior people brand new cars. They just give you money, go and buy what you want to buy. Everybody’s adjusting. Households are adjusting.”
For Fagbolu, the shift is as much about behavior as it is about numbers. “It’s simple demand and supply, but also confidence. Everybody’s not trying to buy dollars, but every money you get, so you do one small deal now, you make, you can’t change it to dollars,” he said.
“We’ve seen this before” – Ugo Obi-Chukwu
The CEO of Nairametrics and host of the show, Ugo Obi-Chukwu, while acknowledging the improvements, cautioned against over-celebration.
“But haven’t we seen this before. Like I remember 2017, 2018, 2019, where it was N360/$1 for two straight years,” he said.
Obi-Chukwu also pointed to signs of resilience in local industries.
“I go on my Instagram feeds these days, and then I see a lot of advertising of Nigerian apparels.
“And then it used to be one particular one, and then all of a sudden you’re seeing different types, like whether it’s some guy, you know, basically advertising, you know, a native or a kaftan.
“Because before, what we’ve always said is that the problem has always been the mass production of made in Nigeria clothes. We don’t really have that. So, it was always bespoke. Made-in-Nigeria clothes were pretty expensive,” he said.
Arnold Dublin-Green, Chief Investment Officer, Cordros Capital Ltd, stated how consumer patterns reflect macroeconomic adjustments.
He said, “So I was in Port Harcourt last weekend, and the number of Chinese cars that I saw in PH, I was actually quite shocked. More than I normally see in Lagos, just walking on the road.”
For the Naira to maintain its upward trend, the government must double down on transparency in FX markets, ensure fiscal discipline, keep boosting oil and non-oil revenues, and create an enabling environment for local industries.
As Fagbolu put it, “Stability comes first, then confidence, and only then can we build growth. The foundations are being laid, but the real test is consistency.”
What next?
While optimism is evident, all the analysts agreed that sustainability is key. For the Naira to maintain its upward trend, the government must double down on transparency in FX markets, ensure fiscal discipline, keep boosting oil and non-oil revenues, and create an enabling environment for local industries.
As Fagbolu put it, “Stability comes first, then confidence, and only then can we build growth. The foundations are being laid, but the real test is consistency.”
What you should know
Last week, Nairametrics reported that forex traders attributed the recent exchange rate stability to the success of Nigeria’s currency swap agreement with Chinese traders now collecting naira for its currency, the yuan, instead of dollars.
They stated that these factors are helping to put less pressure on the naira.
The Naira closed at N1,503.5/$1 on Friday, according to data on the website of the Central Bank of Nigeria (CBN).
The currency has gained massively against the dollar in recent weeks, trading between N1502/$1 and N1531/$1 in the official market in recent weeks.
In early September, Standard Bank adjusted its medium-term outlook on the Naira, stating that it expects the currency to close 2025 at N1,585.5/$1, compared to its earlier forecast of N1,697.5/$1.
The revision follows new market evidence and developments in recent months that point to a more stable trajectory for the currency.
The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, declared that Nigerians are regaining confidence in the naira, crediting this development to a combination of fiscal discipline and targeted monetary reforms.
He stated this following the conclusion of the 301st Monetary Policy Committee (MPC) meeting in July.
These experts are either ignorant or deliberately distorting the truth. Remove Dangote Refinery from the equation and tell me what you have. But, all the “expert opinions” we read don’t even mention that. I wonder whether it’s a consistent pattern or there’s someone pulling the strings.