BUSINESS DAY
The naira has kicked off the year with its strongest rally in 13 years, mirroring an early surge in 2024 that was ultimately undone by foreign investors cashing out. But this time, the forces at play suggest the story may unfold differently.
Since December 2024, the naira has gained 9 percent, strengthening from N1,662/$ on Dec. 2 to N1,509/$ on Feb. 13, the biggest gain among African currencies, according to BusinessDay data.
In January alone, it appreciated 4 percent (N63.14), hitting a seven-month high of N1,478.22/$. The last time the currency appreciated in the month of January was in 2012.
Although the rally has cooled slightly in February, with the naira stabilising around N1,500/$, its strength in the parallel market has continued. It climbed to N1,545/$, up from N1,620/$ at the start of the month.
Déjà vu or a new dawn?
The last time the naira surged this quickly, the gains were short-lived. In March 2024, the currency rallied from N1,600/$ the previous month to a peak of N1,300/$ on the back of surging foreign portfolio inflows (FPIs) and diaspora remittances. That remarkable turnaround saw the naira go from the world’s worst-performing currency to its best performer in a matter of weeks.
However, as dollar inflows slowed, cracks in the FX market reappeared. By July, the naira had not only erased its gains but had fallen to an even weaker N1,660/$.
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