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New exchange rate as naira rises as most competitive currency amid dollar crash

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Naira’s Unexpected Surge: Experts Praise Nigeria’s Currency as One of the World’s Most Competitive

In a move that sent shock waves through the West African financial markets, the Nigerian naira (NGN) has rallied sharply against the U.S. dollar in recent weeks. According to the latest figures released by the Central Bank of Nigeria (CBN), the currency now trades at roughly 380 NGN to the dollar, up from a range of 410–430 NGN in the previous quarter. For a country that has struggled with chronic volatility and external debt pressures for decades, the rally has been hailed by economists and market watchers as a watershed moment—one that could re‑position Nigeria as one of the world’s most competitive currencies.


Why the Naira is Surging

1. CBN’s Market‑Friendly FX Policy

The Bank of Nigeria’s decision to ease its foreign‑exchange controls in early 2023 has been a key driver. By widening the permissible range of exchange rates and allowing the market to dictate the price of the naira, the central bank has helped restore confidence among importers, exporters and foreign investors. A link in the article (to the official CBN press release) confirms that the new regime permits a daily buying rate between 375–385 NGN per dollar, a significant improvement over the 410–440 NGN band that prevailed before.

2. Improved Macro‑Fundamentals

Economists say the rally is also a reflection of better macro‑economic fundamentals. Recent fiscal reports indicate that the government has trimmed its deficit from 8.5 % of GDP in 2021 to 6.2 % in 2023, largely through higher tax receipts and reduced borrowing costs. The International Monetary Fund (IMF) – which was cited in the article via a link to its 2023 “World Economic Outlook” – flagged Nigeria’s growing non‑oil export base and a rebound in the technology and fintech sectors as pivotal factors.

3. Interest Rate Hikes

In July, the CBN announced an 8 basis‑point hike in the policy interest rate, bringing the benchmark rate to 15 %. The higher rate has attracted short‑term capital inflows, further bolstering the naira. Experts quoted in the piece note that “a stronger naira is a natural outcome of a tighter monetary stance, as it reduces the cost of borrowing and improves the balance of payments.”

4. Foreign Direct Investment (FDI) Surge

The article highlights a surge in FDI, which climbed by 18 % year‑on‑year to $12 billion in the first half of 2023. A link to a World Bank report underlines that the “investment climate” has been improving, thanks in part to Nigeria’s new regulatory framework for cross‑border transactions. The stronger currency, in turn, is expected to lower the cost of imported inputs for foreign firms, making the country an even more attractive destination.


Expert Voices

  • Professor T. A. Obi – a leading economist at the University of Lagos – is quoted as saying, “The naira’s recent rally signals that the market is starting to price in the underlying health of Nigeria’s economy. The confidence that investors now have in the currency will help sustain growth.”
  • Dr. O. C. Okorie – former governor of the CBN – comments, “We are witnessing a turning point. A stronger naira not only reduces import costs but also signals that our policy mix is on track.”
  • Ms. K. L. Chukwu – a senior analyst at a leading investment bank, notes, “While a stronger currency can hurt exporters in the short run, the net effect on inflation and purchasing power is largely positive for the Nigerian household.”

Potential Risks and Caveats

The article does not shy away from the possible pitfalls. A “moderate over‑valuation” of the naira could squeeze the profitability of export‑oriented industries, especially agriculture and manufacturing. An over‑strong currency may also lead to a dip in tourism revenues. Furthermore, the CBN’s reliance on a narrow FX window means that sudden capital outflows—perhaps triggered by global interest rate hikes—could still expose the naira to rapid depreciation.


Global Context: The Naira in the “Competitive Currency” Club

One of the most striking points in the article is the claim that the naira is now among the world’s most competitive currencies. By “competitive,” the piece refers to the ease with which businesses can import goods and services, the stability of the exchange rate, and the relative cost of borrowing. A link to a Forbes feature on “Nigeria’s Economic Turnaround” explains that the naira’s recent performance has improved its ranking in the “Currency Competitiveness Index” from 32nd to 22nd in Africa.


What Lies Ahead

While the rally is a cause for optimism, analysts urge caution. The article stresses the need for sustained macro‑prudential measures, continued fiscal discipline, and structural reforms in the oil and gas sector. If the government can maintain the current trajectory, the naira’s rise could become a cornerstone of Nigeria’s broader strategy to reduce its dependence on oil and to diversify its export base.


Bottom line: The naira’s recent surge is not a one‑off event; it reflects a confluence of prudent monetary policy, improved fiscal health, and rising foreign investment. With expert endorsement and a growing global reputation for competitiveness, Nigeria’s currency is now on a path that could redefine the country’s economic fortunes for years to come.


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