The Nigerian naira strengthened against the British pound on Thursday, appreciating in both the official and parallel foreign exchange markets as the Central Bank of Nigeria’s (CBN) monetary tightening measures continued to support the local currency.
Market data showed the pound trading at about ₦1,825/£ at the official Nigerian Foreign Exchange Market (NFEM), improving from approximately ₦1,831/£ recorded at the close of trading on Wednesday.
In the parallel market, the British currency exchanged at around ₦1,905/£, reflecting persistent demand for foreign exchange from importers, travellers and other end-users, although the spread between official and unofficial rates has continued to narrow.
Analysts attributed the naira’s resilience to the CBN’s sustained liquidity management strategy, which has reduced excess naira liquidity within the banking system. The apex bank has maintained a Monetary Policy Rate (MPR) of 26.5 per cent and a Cash Reserve Ratio (CRR) of 45 per cent, limiting speculative demand for foreign exchange.
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The tighter liquidity conditions have also curtailed opportunities for speculative trading in the parallel market, while supporting inflows from diaspora remittances, portfolio investments and official foreign exchange interventions.
Currency traders noted that the narrowing gap between official and parallel market exchange rates suggests improving confidence in Nigeria’s foreign exchange market, with reduced incentives for arbitrage and speculation.
Against the US dollar, the naira continued to trade within the ₦1,370 to ₦1,380/$ range at the official market, while market participants expect the exchange rate to remain relatively stable in the near term, supported by CBN dollar sales and steady foreign exchange inflows.
Globally, the British pound strengthened against the US dollar during Thursday’s European trading session, buoyed by investor optimism over the United Kingdom’s fiscal outlook and political developments. Sterling climbed to around $1.33, while investors awaited the release of the United States June non-farm payrolls report, which is expected to provide fresh signals on the Federal Reserve’s interest rate path.
