The Nigerian naira recorded a strong gain against the British pound on Monday, trading at N1,814/£ in the official foreign exchange market. This is the strongest level the local currency has reached against the pound in July.
The naira has continued to improve against the British pound this year after closing last year at about N1,950/£.
The exchange rate recently returned to the N1,814 level after moving within a narrow range of N1,810/£ to N1,830/£ in the middle of July.
Analysts say reforms introduced in Nigeria’s foreign exchange market and the Central Bank of Nigeria’s efforts to clear outstanding foreign exchange obligations have helped reduce the gap between the official and parallel markets.
The Central Bank has also maintained a tight monetary policy by keeping interest rates high. This is aimed at reducing inflation and attracting more foreign investment into naira-denominated assets.
In addition, the apex bank’s interventions in the foreign exchange market have increased the supply of dollars and reduced the backlog of foreign exchange payments. These measures have helped strengthen the naira and narrow the difference between official and black market exchange rates.
However, experts note that Nigeria still faces strong demand for foreign currencies due to imports, international trade and external debt payments. These factors could continue to put pressure on the naira over the long term.
Nigeria’s foreign exchange earnings have also received support from improved crude oil production, favourable global oil prices and other foreign inflows, helping to improve market liquidity and boost external reserves.
Meanwhile, the Bank of England has kept its benchmark interest rate at 3.75 percent. The decision reflects concerns over persistent inflation and wage growth in the United Kingdom.
Higher interest rates in the UK have continued to support the value of the British pound against many major currencies.
The British pound remained around $1.3290 during early trading on Tuesday as investors awaited the United States Federal Reserve’s latest monetary policy decision.
The US dollar also remained firm due to renewed geopolitical tensions in the Middle East, increasing demand for the currency as a safe haven.
Market analysts expect the Bank of England to leave interest rates unchanged for now, although some traders believe there could be one or two small rate increases before the end of 2026 if inflation remains high.
Investors are also watching the UK’s retail sales data due later this week, as stronger-than-expected figures could encourage the Bank of England to maintain a stricter monetary policy.
