The naira rose by 2.3 per cent to close weekend at N1,553 per dollar, sustaining a steady rally on the back of widespread optimism on stability of the Nigerian foreign exchange (forex) market.

Data from the Central Bank of Nigeria (CBN) showed that naira, which had opened last week at N1,579.27, maintained steady closing the week stronger.

Analysts at Cordros Capital stated that the naira gain was due to inflows from foreign portfolio investors (FPIs).

Analysts projected that naira would remain relatively stable in the near term, citing gradual moderation in global headwinds and the capacity of the apex bank to moderate market fluctuations.

“The easing of global pressures has partly contributed to a renewed interest from foreign investors in the Nigeria’s capital markets, thereby enhancing forex inflows,” Cordros Capital stated in a weekend review.

The CBN has in recent months, activated multiple forex sources to increase dollar inflows, boost dollar access to manufacturers and retail end users and support naira recovery across markets.

Global rating agencies – Moody’s and Fitch – had cited the forex market outlook as part of the consideration for their latest upgrades of Nigeria’s sovereign ratings.

From moves to improve diaspora remittances through new product development, the granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller FX model, and enabling timely access to naira liquidity for IMTOs, the apex bank has simplified dollar-inflow channels for authorised dealers and other players in the value chain.

Given that FX inflows to the economy are strategic in achieving monetary and fiscal policy stability, the CBN under its Governor, Olayemi Cardoso puts in a lot of efforts in attracting more inflows into the economy.

Diaspora remittances to Nigeria, estimated at $23 billion annually, remain a reliable source of forex to the domestic economy. There are also other sources and policies that are being explored by the apex bank to keep dollar inflows coming.

The CBN’s initiatives have supported continued growth in these inflows, aligning with the institution’s objective of doubling formal remittance receipts within a year.

The remittances in the economy is expected to increase based on CBN’s ongoing efforts to bolster public confidence in the foreign exchange market, strengthen a robust and inclusive banking system, and promote price stability, which is essential for sustained economic growth.

Director of Trading at Verto, Charlie Bird, said dollar liquidity dynamic is now more balanced, with foreign investors and airlines able to repatriate funds.

Speaking during Cordros Asset Management seminar titled: “The Naira Playbook”, he said Nigeria is now darling of foreign investors because of improved dollar liquidity in the economy due to positive CBN’s reforms.

For instance, the CBN under Cardoso, recently announced the introduction of two new financial products designed to serve Nigerians living abroad and attract more diaspora remittances.

These and other measures, including the granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller model, and enabling timely access to naira liquidity for International Money Transfer Operators (IMTOs).

The CBN recently released the reviewed guidelines of International Money Transfer Services in Nigeria. These Guidelines mark a significant shift in how IMTOS conduct their operations, reflecting the CBN’s ongoing efforts to enhance transparency and efficiency in foreign exchange transactions and to bolster diaspora remittances into Nigeria.

Further circular titled “New Measures to Enhance Local Currency Liquidity for Settlement of Diaspora Remittances” highlighted the apex bank’s commitment to improving the Nigerian foreign exchange market infrastructure by increasing the flow of remittances through formal channels.

It introduces measures aimed at providing licensed IMTOs with access to Naira liquidity from the CBN, facilitating the disbursement of remittances to beneficiaries.