Despite the recent strong appreciation of the Naira in the foreign exchange market, experts caution that the stability of the currency remains uncertain.
Recent data from Financial Vanguard shows the Naira has gained 9.61% in the parallel market, rising to N1,505/$1 from a high of N1,665/$1 earlier this year. The official market has also seen a 3.1% appreciation, moving to N1,500/$1 from N1,548/$1.
This strengthening of the Naira has had a positive effect on businesses, especially in terms of pricing and operational costs. However, experts believe there are concerns about the sustainability of this trend.
Fiscal Authority Must Complement Monetary Policies
An economist shared a hopeful view, emphasizing that the Naira’s appreciation is a promising trend, urging fiscal authorities to work in tandem with monetary authorities to prevent unnecessary liquidity surges that could destabilize the macroeconomic environment.
Naira’s Appreciation Alone Won’t Ensure Price Stability — Adonri
David Adonri, Analyst and Executive Vice Chairman at Highcap Securities Limited, remarked that the recent Naira appreciation may not immediately impact the price of goods due to the delayed effects in economics. He pointed out that inflation is driven by several factors beyond currency volatility.
“The government has spent around $8 billion to stabilize the Naira, and while the recent appreciation is promising, it may be a short-term result,” Adonri said. He also noted that the Naira’s future strength depends on reducing pressures from the petroleum sector and addressing challenges posed by insecurity in rural areas.
Impact on Economy Depends on Sustainability — Egbomeade
Clifford Egbomeade, Analyst and Communications Expert, acknowledged the recent Naira appreciation as a positive signal for businesses relying on imported inputs and consumers grappling with inflation. However, he stressed that the true impact on the economy will depend on whether this trend is sustainable.
“If the Naira’s strength is backed by strong fundamentals like higher foreign exchange reserves, increased foreign investment, and a boost in export performance, the positive effects will be more lasting,” Egbomeade explained. He further emphasized that lasting change depends on structural reforms, not just short-term market interventions, and noted that sustained stability could provide businesses with significant relief.
“Inflation control is crucial. If domestic prices continue to rise, any currency gains might not translate into long-term economic benefits. The government needs to focus on boosting local production and reducing import dependence to ensure that this appreciation is more than just a temporary fluctuation,” he added.
Helping Businesses Plan Better — ASBON
Dr. Femi Egbesola, President of the Association of Small Business Owners of Nigeria (ASBON), highlighted that the relative strengthening of the Naira has positively impacted businesses. The stability has contributed to the recent disinflation and GDP growth, making it easier for businesses to plan and project for the future.
“The exchange rate stability has instilled trust among investors, increasing confidence and investment in the economy. SMEs are now able to compete more effectively due to lower input costs, leading to higher sales and profits,” Egbesola noted.
