The Nigerian naira continued its upward trajectory against the United States dollar on Wednesday, marking gains both in the official foreign exchange market and the parallel market, much to the satisfaction of 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 ₦1,262.85/$ on Wednesday, compared to ₦1,278.58/$ recorded on Tuesday.
This sustained positive movement signifies the naira’s resilience against the dollar, with expectations pointing towards further appreciation.
The recent strengthening of the local currency is attributed to various foreign exchange policies enacted by the Central Bank of Nigeria (CBN) aimed at bolstering dollar supply and fostering transparency in the FX market.
Notable among these policies include the abolition of market segmentation on June 14, 2023, and the consolidation of all segments into the Investors & Exporters window, now known as the Nigerian Autonomous Foreign Exchange. Additionally, the reintroduction of the Willing Buyer, Willing Seller framework was implemented alongside other reforms.
In January 2024, the CBN directed International Money Transfer Operators to base their exchange rate for naira payout on prevailing market prices. Subsequent measures in February and March 2024 further aimed at reducing exchange rate volatility and enhancing market transparency.
Currency traders, speaking to The PUNCH, attributed the naira’s appreciation to reduced demand for the dollar and the CBN’s intervention in selling foreign exchange to operators.
Ibrahim Yahu, a BDC operator in Wuse Zone 4, noted, “The demand for dollars has significantly decreased, and the naira is strengthening due to the new rate set by the CBN for traders. The direct sale of forex to us by the CBN has notably boosted trading activities.”
Meanwhile, at the parallel market, the naira strengthened to ₦1,250 against the dollar, marking a 0.8 percent gain (₦10) compared to the previous day’s closing rate of ₦1,260.
The recent appreciation of the naira marks a significant turnaround from its lowest point of ₦1,825/$ on the parallel market recorded on February 20, 2024, representing a 46 percent gain in value against the dollar.
