Naira Bulls Run on Strong Reserves, But Subsidy Storm Clouds Gather

The Nigerian naira is on a tear, benefiting from a perfect storm of positive fundamentals. With external reserves hitting $52.66 billion — a $7.09 billion year-to-date surge — the CBN has a formidable buffer. The central bank's arsenal is full as a weakening US dollar, now trading near a 5-month low of 98.88, makes Nigerian assets look attractive and eases import costs. Stronger FX liquidity in the official market and tight monetary policy have narrowed arbitrage,...