Latest market action shows the Nigerian currency is quite bullish against the US dollar.
It is worth noting that the Nigerian currency has made a notable comeback against the US dollar in the first half of May.
The currency pair has dropped significantly below the notable psychological level of N1,400/$.
In fact, it is now testing lower support levels like N1,350/$ mark.
It is important to note that the psychological level and support structure are crucial.
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The Nigerian naira may strengthen below the N1320/$ area if the NGN bulls maintain their bullish momentum
Typically, the most important task for the Central Bank of Nigeria (CBN) in this situation would be to achieve medium-term stabilization of the Nigerian naira.
According to recent news, there has been a significant increase in Forex inflows from foreign investors, exporters, and oil companies.
Market participants explain that the attractive returns on the Nigerian debt market attracted foreign investment, leading to the availability of Naira supporting funds.
There is a gap between the Nigerian foreign exchange market and the black market, but it is gradually narrowing between the rates in the official and parallel markets. The street rate was about N1,404/$, while the official rate was N1,356/$.
The narrowing difference between these two rates is a positive sign that the markets are coming together.
The US Dollar Index (DXY), which gauges the greenback strength against six global currencies, is trading at about 98.1 in the London trading session, maintaining some bullish momentum after posting losses on Friday.
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