Yesterday, the Nigerian Naira strengthened to N1,350 against the dollar in the parallel market, improving from N1,430 per dollar on Monday.
In a similar trend, the naira also saw a rise to N1,382.95 per dollar in the Nigerian Foreign Exchange Market (NAFEM), as shown by FMDQ data. This is an increase from Monday’s rate of N1,408.04 per dollar, marking a N25.09 appreciation of the naira.
This appreciation resulted in the gap between the parallel market rate and the NAFEM rate expanding to N32.95 per dollar, compared to the N21.96 per dollar difference observed on Monday.
Over the last month, there has been an 18.28 percent increase in the value of the Nigerian Naira, climbing to N1,408.04 on Monday from a February 23, 2024, low of N1,665.50, according to FMDQ Securities Exchange data.
The recent gains of the naira are largely due to the foreign exchange policy reforms undertaken by the Central Bank of Nigeria (CBN).
These reforms include merging multiple exchange rate windows, making the FX market more flexible, clearing FX backlog for banks and airlines, initiating a Price Verification System (PVS), setting limits on banks’ Net Open Position, eliminating the daily limit on remunerable Standing Deposit Facility (SDF) to N2 billion, and overhauling the Bureau De Change (BDC) sector.
Further measures to foster a more willing buyer-seller FX market environment encompass eliminating margin limits for International Money Transfer Operator (IMTO) remittances, implementing a two-way quote system, and comprehensive reforms in the BDC sector to enhance market stability, transparency, supply, and price discovery.
Additionally, the Central Bank of Nigeria (CBN) provided dollars to Bureau De Change (BDC) Operators at N1,251 each.
A CBN circular stated that BDCs should sell dollars to eligible customers at a price not exceeding 1.5 percent above their purchasing rate.
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