The Nigerian naira continued its upward trajectory against the United States dollar on Wednesday, recording gains both at the official foreign exchange market and the parallel markets.
This surge in value has elicited widespread optimism among Nigerians.
Data from the FMDQ Securities Exchange revealed that at the Nigerian Autonomous Foreign Exchange Market, the naira appreciated by N16 or 1.26 percent, with the dollar quoted at N1,262.85/$. This marks a significant improvement from the N1,278.58/$ recorded on Tuesday, indicating a sustained positive streak for the local currency.
The appreciation of the naira can be attributed to various foreign exchange policies implemented by the Central Bank of Nigeria (CBN) aimed at bolstering dollar supply and fostering transparency in the FX market. Key reforms include the abolition of market segmentation, introduction of the Willing Buyer, Willing Seller framework, and directives to International Money Transfer Operators to quote exchange rates based on prevailing market prices.
In addition, the CBN’s decision to discontinue caps on interbank Forex transaction spreads and restrictions on the sales of interbank proceeds, along with the limitation of Personal Travel Allowance and Business Travel Allowance payouts to electronic channels, have contributed to reducing naira volatility and enhancing market transparency.
Currency traders have noted a decline in dollar demand, attributing the naira’s appreciation to the CBN’s direct sale of foreign exchange to operators. Ibrahim Yahu, a BDC operator, highlighted the positive impact of the CBN’s new exchange rate determination on trading activities.
At the parallel market, the naira strengthened further to N1,250/$, marking a gain of 0.8 percent (N10) compared to Tuesday’s closing rate of N1,260/$.
Overall, the naira’s remarkable appreciation reflects a 46 percent increase in value against the dollar since February 20, 2024, underscoring the effectiveness of recent CBN reforms in stabilizing the FX market and boosting investor confidence.
