Official Market: Subtle Appreciation in Early Trade
At the official window, the Naira opened at approximately 1,828.32 per Pound. During early morning trading, the exchange rate showed modest improvement, with the Pound easing to 1,826.63 by 6:00 AM WAT.
This performance follows a volatile midweek session in which the Naira had briefly weakened to 1,834.96 per Pound on Wednesday, underscoring the still-sensitive nature of currency flows despite broader signs of stability.
Market observers link the current steadiness to tactical interventions by the Central Bank of Nigeria (CBN). The apex bank has reportedly been active in managing both dollar and sterling liquidity in the system to prevent sharp intraday spikes. These interventions come as the CBN transitions toward a data-dependent monetary easing cycle, following a recent 50-basis-point reduction in the benchmark interest rate.
Analysts say this calibrated approach signals that while the central bank is gradually shifting toward growth-supportive policy, it remains vigilant about exchange rate volatility.
Parallel Market: Narrow Premium Persists
In the parallel market, the Pound Sterling continues to trade at a modest premium, changing hands between 1,840 and 1,855 per Pound.
Although the informal segment still caters largely to retail demand — including travel allowances, school fees, and personal remittances — the spread between the official and parallel rates remains relatively narrow compared to previous years.
Currency traders in Lagos and Abuja note that demand for the Pound remains steady, particularly due to ongoing tuition payments to institutions in the United Kingdom and settlement of international service contracts. However, the panic-driven accumulation of foreign currency that once characterised the market has largely subsided.
The relative convergence of rates is widely attributed to the renewed participation of Bureau De Change (BDC) operators in the official foreign exchange supply chain. Their reintegration has expanded access to formal FX channels and reduced speculative pressure in the informal segment.
Macroeconomic Drivers Supporting the Naira
Several underlying economic factors are shaping the NGN/GBP trajectory this Friday:
1. Reserve Accretion
Nigeria’s external reserves have climbed to a 13-year high of $50.45 billion. This substantial buffer has strengthened investor confidence in the CBN’s capacity to defend the Naira against external shocks and speculative attacks. Higher reserves also improve the country’s import cover and reinforce perceptions of macroeconomic resilience.
2. Monetary Policy Adjustment
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria recently reduced the benchmark interest rate to 26.50 percent, marking the beginning of a measured easing cycle. The decision reflects moderating inflation, which stood at 15.10 percent in January.
A cooling inflation environment provides greater predictability for foreign portfolio investors and reduces uncertainty in fixed-income markets, factors that indirectly support currency stability.
3. Global Currency Conditions
Globally, the Pound remains firm, supported by steady economic data from the United Kingdom. However, its gains against the Naira are being tempered by improved domestic fundamentals in Nigeria — including increased oil production and reduced demand for imported refined petroleum products.
Stronger oil output improves foreign exchange inflows, while lower refined fuel imports reduce dollar demand, both of which ease pressure on the local currency.
Outlook: Narrow Band Expected
As the trading week concludes, analysts anticipate that the Pound-to-Naira rate will likely fluctuate within the 1,820 to 1,835 range in the official market, barring any sudden shifts in global risk sentiment over the weekend.
While volatility has not entirely disappeared, the current environment reflects a more coordinated interplay between monetary policy, reserve management and market participation. For now, the Naira appears to be holding its ground — supported by stronger buffers, moderated inflation, and a more structured foreign exchange framework.