Yesterday, the Nigerian naira saw an uptick in value, appreciating to N1,350 per dollar in the parallel market from N1,430 per dollar on Monday. Similarly, within the Nigerian Foreign Exchange Market (NAFEM), the naira strengthened to N1,382.95 per dollar. Data sourced from FMDQ revealed a decline in the indicative exchange rate for NAFEM to N1,382.95 per dollar from N1,408.04 per dollar the previous Monday, marking a N25.09 appreciation for the naira.
Consequently, the disparity between the parallel market rate and NAFEM widened to N32.95 per dollar from N21.96 per dollar recorded on Monday. Over the past month, the Nigerian naira has demonstrated significant resilience, surging by 18.28 percent to N1,408.04 on Monday, from its low of N1,665.50 on February 23, 2024, according to data compiled from the FMDQ Securities Exchange.
This recent positive trend in the naira’s performance against the dollar can be attributed to foreign exchange reforms spearheaded by the Central Bank of Nigeria (CBN). Key reforms include the consolidation of exchange rate windows, liberalization of the FX market, resolution of FX backlog obligations for banks and airlines, implementation of a Price Verification System (PVS), imposition of limits on banks’ Net Open Position, removal of the daily cap on remunerable Standing Deposit Facility (SDF) to N2 billion, and restructuring of the Bureau De Change (BDC) segment.
Additional measures aimed at fostering a conducive market environment include the elimination of margin limits for International Money Transfer Operator (IMTO) remittances, the introduction of a two-way quote system, and comprehensive reforms within the BDC segment to enhance stability, transparency, supply, and price discovery in the Nigeria Autonomous Foreign Exchange Market.
The CBN also intervened by selling dollars to Bureau De Change (BDC) Operators at a rate of N1,251, as outlined in a circular issued by the CBN. BDCs were directed to sell to eligible customers at a rate not exceeding 1.5 percent above the purchase price.