Naira Strengthens In Official Market Amid Forex Reforms

The naira has shown signs of strengthening in the official foreign exchange (FX) market, currently quoted at ₦1,560.57 to the dollar.

This improvement reflects a 0.79 percent appreciation from the previous day’s rate of ₦1,572.86 at the Nigerian Autonomous Foreign Exchange Market (NAFEM), highlighting the impact of recent FX reforms.

The FMDQ Securities exchange data indicates a notable recovery, with the naira gaining 4.28 percent since reaching a low of ₦1,627.40 per dollar on March 8, 2024.

Tuesday’s trading session saw an intraday high of ₦1,626.50 per dollar, while the low was significantly stronger at ₦1,415/$1, showcasing a volatile but improving trend.

The total foreign exchange market turnover reached $195.13 million on Tuesday, underscoring a vibrant trading environment.

Concurrently, the parallel or black market also witnessed the naira’s fortitude, strengthening to ₦1,570 per dollar from Monday’s close of ₦1,590.

Market analysts project a continued stabilization of the naira, attributing the optimism to the Central Bank of Nigeria’s (CBN) recent policy measures.

These reforms aim to unify the FX market, encourage a willing buyer-willing seller framework, remove remittance margin limitations, introduce a two-way quote system, and restructure the Bureau De Change (BDC) sector to foster market stability and transparency.

The CBN Governor, Oluyemi Cardoso, expressed confidence in the potential of these strategic changes to draw capital inflows, enhance liquidity, and fortify the currency.

Additionally, Nigeria’s external reserves have grown by 3.62 percent, reaching $34.37 billion as of March 12. This growth was bolstered by a significant increase in Diaspora remittances, which surged by 433 percent to $1.3 billion in February.

In a recent Monetary Policy Committee (MPC) meeting, key financial metrics were adjusted, including a 400 basis point rise in the Monetary Policy Rate (MPR) to 22.75 percent, aimed at curbing inflation and stabilizing the naira.

The adjustments reflect a broader strategy to achieve economic stability and growth, echoing sentiments from MPC member Aloysius Uche Ordu on the importance of breaking the inflationary cycle.