Key Points

• The dollar to naira exchange rate shifted again.

• Market volatility shaped dollar to naira movements.

• Traders tracked dollar to naira fluctuations closely.

The Nigerian naira stayed the same against the US dollar on Friday. This was because liquidity improved and speculative demand continued to drop in both the official and parallel FX markets. The calm trading pattern continued the currency’s steady performance from the week before, giving policymakers a break after months of volatility.

The Nigerian Foreign Exchange Market had a dollar to naira exchange rate of N1,450.25, according to data from the FMDQ Securities Exchange. The number fit comfortably within the N1,448 to N1,450 range that was recorded earlier in the week. Traders say this shows that supply is more stable and there are fewer disruptive swings.

The dollar to naira exchange rate is stable again

Dealers said that trading was pretty smooth in the official market, with little difference between the highs and lows of the day. Analysts said that the trend was due to the Central Bank of Nigeria’s ongoing efforts to make things more open and smooth out flows, which has cut down on the sharp intraday distortions that used to happen a lot.

The closing rate of N1,450.25 showed that the market was slowly adjusting to real demand instead of speculative positioning. Traders said that corporate buyers, especially those who depend on imports, were more consistent in their buying, which let the market handle transactions without sudden price changes.

The dollar to naira calm is the same in the parallel market

The parallel market, which is usually the best place to find out how much things cost in stores and for small businesses, traded between N1,455 and N1,460 to the dollar. Bureau de Change operators in Lagos and Abuja said that demand had returned to normal, with fewer speculators looking for quick arbitrage opportunities in the market.

The difference between the two markets got smaller, going below N15, which is one of the smallest spreads in the past few months. People think that the convergence means that there are fewer chances to make money through arbitrage, which is what policymakers have wanted since the rate windows were unified.

Basics help currencies stay strong

Nigeria’s foreign reserves, which are now about $44.56 billion, made people feel more confident that the central bank could step in if supply got tight. At the same time, inflation dropped to 16.05%, the lowest level in three years. This made people feel better about their buying power and took some of the pressure off the currency.

Economists think that the exchange rate will stay in a fairly stable range until the end of the year. Seasonal remittances, which usually go up in December, are also expected to help the market in the next few weeks.