The Nigerian naira has continued its upward trend against the U.S. dollar, reaching its strongest level in seven months at N1,485.95 per dollar.
This latest appreciation is attributed to policy measures implemented by the Central Bank of Nigeria (CBN), which have influenced market dynamics and boosted confidence.
Seven months ago, the naira traded at a similar rate, standing at N1,485.53 per dollar on June 20, 2024, in the official market.
The latest movement reflects the impact of the CBN’s foreign exchange (FX) interventions aimed at stabilizing the currency and improving market efficiency.
Naira Gains 1.67% in Official Market
After trading on Thursday, the naira appreciated by 1.67%, gaining N24.8 as the dollar was quoted at N1,485.95, compared to N1,510.72 on Wednesday at the Nigerian Foreign Exchange Market (NFEM), according to data from FMDQ Securities Exchange Limited.
During trading, authorized currency dealers quoted the dollar as high as N1,516 and as low as N1,470 per dollar.
Parallel Market Sees Slight Decline
Despite gains in the official market, the naira recorded a marginal loss of 0.6% in the parallel market, also known as the black market. The dollar was quoted at N1,635 on Thursday, compared to N1,625 on Wednesday.
CBN’s New FX Code to Enhance Market Transparency
The CBN has introduced a new Foreign Exchange (FX) Code, aimed at enhancing liquidity, ensuring transparency, and guiding market participants in Nigeria’s FX sector.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), described the move as necessary to restore order in the FX market.
“I think the whole idea is to ensure more sanity in the foreign exchange market. Over the years, certain players have created significant problems, and the CBN is now working to sanitize the market. The more discipline we have, the more stability we will achieve,” Yusuf stated.
The CBN clarified that while the FX Code comprehensively addresses key market practices, it is not exhaustive. Market participants are expected to exercise sound judgment and adhere to best practices, especially in cases where specific standards are not explicitly outlined
.Compliance Deadline for Market Participants
Backed by the CBN Act of 2007 and the Banks and Other Financial Institutions Act (BOFIA) of 2020, the FX Code serves as an official directive that all financial institutions must comply with.
As part of compliance measures, market participants must conduct a self-assessment and submit a compliance report to the CBN by January 31, 2025.
Following this, they must also provide a detailed implementation plan for achieving full compliance, which must be formally approved by their board of directors and submitted with relevant board meeting extracts.
These measures are expected to further stabilize the naira and enhance market confidence, reinforcing the effectiveness of the CBN’s foreign exchange reforms.
