The naira appreciated to N1,357 against the United States dollar at the official foreign exchange market on Wednesday.
This extends its recent gains amid sustained interventions by the Central Bank of Nigeria and stronger demand for the local currency.
Market data showed the naira gained nearly N10 against the dollar during the trading session, improving from N1,375.5/$ recorded at the beginning of May.
The latest movement represents about a 1.2 per cent appreciation for the local currency within one week, reflecting renewed confidence in the official market.
Analysts attributed the development to increased participation by both domestic and foreign investors, alongside the apex bank’s continued efforts to stabilise the foreign exchange market.
Trading activity also strengthened during the period, signalling deeper price discovery as investors and businesses increasingly respond to daily market signals rather than speculative pressures.
The improvement comes amid the CBN’s tight monetary policy stance aimed at curbing inflation and attracting investment into naira-denominated assets such as treasury bills and open market operations instruments.
Financial market projections indicate that over N10.53tn in liquidity from maturing Treasury Bills and OMO instruments could enter the financial system in May, a development analysts say may pose fresh pressure on the naira if excess liquidity is not effectively managed.
Despite those concerns, the local currency has continued to benefit from relatively stable global market conditions and cautious monetary policy signals from the United States federal reserve.
The US Dollar Index, which tracks the strength of the greenback against six major currencies, remained subdued during Wednesday’s London trading session after posting losses earlier in the week.
Weaker US manufacturing and retail sales figures have reduced expectations of aggressive interest rate hikes by the Federal Reserve, while improving economic conditions in parts of Europe and Asia have also weighed on the dollar.
Investors are now awaiting the release of the April US jobs report on Friday, with economists projecting 60,000 new jobs and an unemployment rate of 4.3 per cent.
Market observers said stronger labour market figures could support the dollar if wage growth remains elevated, while weaker data may strengthen expectations of future rate cuts by the Federal Reserve.