Naira Appreciates To ₦1,350/$ In Parallel Market

The Nigerian currency, the naira, experienced a notable appreciation in value, reaching ₦1,350 per dollar in the parallel market, a sharp rise from ₦1,430 per dollar on Monday.

This trend was mirrored in the Nigerian Foreign Exchange Market (NAFEM), where the naira strengthened to ₦1,382.95 per dollar, up from ₦1,408.04, as reported by FMDQ data.

This development has resulted in an increased gap between the parallel market rate and the NAFEM rate, which has expanded to N32.95 from the previous N21.96.

The naira’s value has been on an upward trajectory, with an 18.28 percent increase recorded since February 23, 2024, when it hit a low of ₦1,665.50.

Analysts attribute the naira’s recent gains to a series of foreign exchange reforms implemented by the Central Bank of Nigeria (CBN).

These reforms, aimed at streamlining the foreign exchange system, include consolidating exchange rate windows, liberalizing the FX market, and clearing foreign exchange backlogs for banks and airlines.

The CBN’s introduction of a Price Verification System (PVS), revised limits on banks’ Net Open Position, removal of the daily cap on remunerable Standing Deposit Facility (SDF), and the restructuring of the Bureau De Change (BDC) sector, are steps towards fostering a more transparent and efficient market.

Further measures to enhance market dynamics include adjusting margin limits for International Money Transfer Operator (IMTO) remittances, implementing a two-way quote system, and thorough reforms in the BDC segment.

These initiatives are designed to improve market stability, transparency, supply, and price discovery in the Nigeria Autonomous Foreign Exchange Market.

In a recent move, the CBN has set the sale rate of dollars to BDC Operators at ₦1,251, directing them to offer foreign currency to eligible customers at a margin not exceeding 1.5 percent above this rate.