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The naira has reached its highest level against the dollar since January 2023, trading at N1,245 to the dollar at the official window. This represents the fourth straight week of gains for the local currency, which has been buoyed by improved confidence and foreign exchange liquidity.
In an effort to strengthen the naira, the CBN has implemented several policies to increase local dollar liquidity and free up the naira. The Economist Intelligence Unit (EIU) had predicted further depreciation of the naira, but the currency has defied these expectations. The EIU had forecast the naira would eventually reach around N2,000 per US dollar this year, but so far the local currency has remained stronger than predicted.
Although the naira is strengthening, experts believe it faces significant resistance against the dollar. While the CBN’s monetary policy tightening has contributed to the naira’s strength, the dollar’s broad-based strength and strong U.S. economic data pose challenges. The naira could retrace back towards N1200/$ if these headwinds persist.
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