Naira firms below N1,600/$ as business sentiment lifts currency outlook
BY TEMITOPE ADEBAYO
The Naira held steady below the N1,600/$ threshold during the just-concluded holidays, trading between N1,587 and N1,590 per dollar in the parallel market early Tuesday, as transaction volumes remained muted across Nigeria’s commercial capital.
Despite the lull, fresh indicators from the Central Bank of Nigeria (CBN) show renewed optimism across key sectors of the economy, with businesses expressing strong confidence in the local currency’s near-term stability.
Agriculture emerged as the most confident sector in the CBN’s latest business expectations survey, underscoring investor belief in Nigeria’s economic prospects. Across factories, power plants, and trading hubs, business leaders are planning to scale operations in the second half of the year, buoyed by expectations that the naira will strengthen further.
Economist and Financial Derivatives Limited CEO, Mr Bismarck Rewane, projected that the naira will likely range between N1,600 and N1,650 per dollar in the coming weeks.
Speaking at the Lagos Business School’s June breakfast session, Rewane said the naira remains undervalued by about 26.82 per cent using standard metrics, while a recent 8.7 per cent slide in the US dollar could offer further support to the local unit.
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Rewane also highlighted a critical improvement: the gap between official and parallel market exchange rates has narrowed to within 1–3 per cent, a far cry from the 50–70 per cent gulf seen prior to the CBN’s policy realignments. “The margin now sits within N50, which suggests the currency is finally priced,” he noted.
Meanwhile, the US dollar remained stable in global markets, holding close to a six-week low at 98.99 on the Dollar Index amid cautious trading ahead of the May inflation report. Investors are bracing for signs of tariff-related inflationary pressures, with market watchers closely monitoring developments between US and Chinese officials currently engaged in trade talks in London.
UBS economist Dean Turner warned that global investors are beginning to reassess the dollar’s dominance, citing rising Treasury yields, volatile headlines, and mounting fiscal uncertainties in Washington. Though he stopped short of recommending a full retreat from the dollar, Turner acknowledged that confidence in the greenback is slipping.
With domestic business sentiment on the rise and the naira showing resilience, analysts suggest the Nigerian currency may continue to defy downward pressure in the near term, especially if reforms hold and global headwinds remain in check.
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