Nigeria’s naira is projected to gain in value against the US dollar in the coming days as stronger foreign exchange inflows and central bank interventions continue to tighten liquidity conditions and narrow the gap between official and parallel market rates traders and analysts say citing a Reuters report. The improved outlook reflects growing confidence in Nigeria’s currency markets after sustained inflows of foreign currency.

According to the Reuters report the naira was trading at around ₦1,344 per dollar in Nigeria’s official foreign exchange market on Thursday compared with about ₦1,357 a week earlier as overseas flows into the economy supported the local unit. In the parallel market the naira was changing hands around ₦1,385 per dollar as broader trading conditions improved.

Market participants expect the local currency will extend its recent gains in the coming week helped by foreign exchange inflows and central bank dollar sales to bureau de change operators, which have helped narrow the spread between official and parallel exchange rates. One trader told Reuters that renewed inflows into Nigeria’s foreign exchange market are helping to reduce premium pressures and support the currency.

The outlook for the naira comes amid rising external reserves which provide the Central Bank of Nigeria (CBN) with greater capacity to defend the currency and meet external obligations. Latest data shows Nigeria’s reserves have climbed above $48 billion, the highest level in years, reflecting continued inflows from oil receipts remittances and foreign investment.

Economists say stronger inflows reduce pressure on the naira by increasing available foreign currency supply in official markets and narrowing disparities with the unofficial market which traders monitor closely. This, they add, can boost investor confidence and make it easier for importers to access dollars at more stable rates.

Despite the improved outlook analysts note that continued gains will depend on maintaining favourable inflows and effective policy support as Nigeria prepares for key economic and fiscal events in the months ahead.