The naira has strengthened sharply in recent weeks, reaching one of its strongest levels in nearly two years, even as rising foreign portfolio inflows increase the risk of investor profit-taking later in the year, according to a macro update by CardinalStone.
According to the report, the naira has witnessed a steep appreciation in the official market (+6.9 per cent year to date), reaching one of the strongest levels of the past two years (1,347.78/$ on Monday), which indicates improved liquidity conditions in the official foreign-exchange window.
However, the spread between the official and parallel markets persisted, with the parallel market initially trading at about a 5.7 per cent premium before narrowing to roughly 3.2 per cent following renewed FX interventions by the Central Bank of Nigeria.
CardinalStone said the narrowing spread suggests “there was more liquidity in the official window than in the parallel market.”
