The rise in oil prices has enabled the Central Bank of Nigeria (CBN) to sustain strategic interventions in the foreign exchange market, aimed at stabilizing the naira and ensuring adequate dollar liquidity.

Brent crude, the international benchmark for global oil prices, heightened tensions between Israel and Iran have increased to $77 per barrel the highest level since early February.

Reuters reports that West Texas Intermediate (WTI) crude for July was up $2.06, or 2.7%, to $77.20.

What does the oil price rally mean for Nigeria?

A sustained rise in crude oil prices has the potential to benefit Nigeria's economy in several key ways significantly.

Firstly, as a major oil exporter, Nigeria stands to increase its dollar earnings, which will boost its foreign exchange reserves, which are currently at $37 billion based on CBN data.

With the increase in forex, CBN will have enough dollars to defend the currency and sustain the much-needed stability to the country's exchange rates, which have been subject to volatility in recent years.

Naira trades below N1,600 Latest data from the CBN shows that the naira closed against the US dollar at N1,551/$ on Thursday, June 19.

This is the same rate the dollar exchanged on Wednesday after it improved by N11.08 from the N1,554.57/$1 it was traded on Tuesday.

This stable exchange rate in the official market is influenced by forex liquidity.

The naira also extended its gains against the pound sterling in the official market on Thursday, appreciating by N6.08 to sell for N2,084.12/£1, compared with Wednesday’s rate of N2,090.20/£1.

It also gained N2.48 on the euro, closing at N1,779.35/€1, up from Wednesday’s N1,781.83/€1.

Here is a snapshot of the latest exchange rates for the naira

CFA: N2.73
Yuan/Renminbi: N215.56
Danish Krona: N238.50
Euro: N1,779.35
Yen: N10.65
Riyal: N412.89
South African Rand: N85.72
Swiss Franc: N1,895.55
Pound Sterling: N2,084.12

Naira in the black market

In the parallel market, also known as the black market, it was a different story has naira returned to above N1,600, according to traders who spoke to Legit.ng.

Abudulahhi a BDC trader explained that there was increased dollar demand reason the rate was adjusted.

He said: "On Thursday, we sold the dollar at N1,602/$1 and bought it at N1,592. The euro traded between N1,787 and N1,803, while the pound sterling was sold at N2,150/£1 and bought at N2,130/£1."

Expert predicts new exchange rate

Earlier, Legit.ng reported that renowned Economist Bismark Rewane has forecasted a strong naira performance for June and July.

The financial expert data indicates that the Central Bank of Nigeria has implemented effective measures to manage money supply growth.

He also provided insight into inflation rate movement.