CPPE Attributes Naira Gains to External Reserves Growth and CBN Interventions

The Centre for Promotion of Private Enterprise (CPPE) has attributed the recent significant appreciation of the Naira against the dollar to improvements in Nigeria’s external reserves and strategic interventions by the Central Bank of Nigeria (CBN).

In a statement released on Sunday, CPPE Director Muda Yusuf highlighted these factors as key contributors to the currency’s strengthening.

The Naira recorded a notable gain of ₦127 last week, closing at ₦1,535 per dollar on Friday compared to ₦1,660 on the previous Monday.

Key Drivers of Naira Appreciation

1. Increased External Reserves
CPPE linked the Naira’s performance to the rise in Nigeria’s external reserves, which recently surpassed $40 billion. Yusuf explained that this bolstered the CBN’s capacity to stabilize the FX market through targeted interventions.

2. Central Bank Reforms
The introduction of the Electronic Foreign Exchange Matching System (EFEMS) by the CBN was cited as another critical factor in fostering stability and confidence in the FX market.

“The improvement in our reserves has empowered the CBN to stabilize the currency,” Yusuf stated. “In addition, reforms in the FX market have resulted in consistent improvements in autonomous inflows, especially from international money transfer operators.”

3. Strengthened Investor Confidence
Yusuf noted that the improved reserve levels have elevated foreign investor confidence, contributing to the currency’s stability and recent gains.

4. Eurobond Success
Sector experts have also linked the Naira’s appreciation to the federal government’s recent success in raising $2.2 billion through Eurobonds, which provided additional support to external reserves.

Positive Outlook

Yusuf commended the currency’s relative stability over the past five months, describing it as a welcome development. He emphasized that the current trend signals the potential for further strengthening of the Naira, contingent on sustained reforms and prudent management of foreign exchange resources.

The recent gains in the Naira’s value have sparked optimism for greater currency stability, improved investor confidence, and economic resilience in Nigeria.

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