Naira Strengthens to N1,350/$ in Parallel Market

The Nigerian naira experienced a notable uptick yesterday, reaching N1,350 per dollar in the parallel market, marking a significant improvement from Monday’s rate of N1,430 per dollar.

Similarly, within the Nigerian Foreign Exchange Market (NAFEM), the naira saw a positive trend, appreciating to N1,382.95 per dollar. Data sourced from FMDQ indicated a decline in the indicative exchange rate for NAFEM from N1,408.04 per dollar on Monday, reflecting a N25.09 appreciation for the naira.

As a result, the margin between the parallel market rate and NAFEM widened to N32.95 per dollar from N21.96 per dollar observed on Monday.

Over the past month, the Nigerian naira has exhibited resilience, recording a remarkable surge of 18.28 percent. On Monday, it reached N1,408.04 per dollar, a notable climb from its low of N1,665.50 recorded on February 23, 2024, according to data compiled from the FMDQ Securities Exchange.

The recent strengthening of the naira against the dollar can be attributed to various foreign exchange reforms initiated by the Central Bank of Nigeria (CBN).

These reforms encompass several key measures, including the consolidation of exchange rate windows, liberalization of the FX market, resolution of FX backlog obligations for banks and airlines, implementation of a Price Verification System (PVS), imposition of limits on banks’ Net Open Position, removal of the daily cap on remunerable Standing Deposit Facility (SDF) to N2 billion, and restructuring of the Bureau De Change (BDC) segment.

Additional measures aimed at fostering a balanced and participatory market include the removal of margin limits for International Money Transfer Operator (IMTO) remittances, the introduction of a two-way quote system, and comprehensive reforms within the BDC segment to enhance stability, transparency, supply, and price discovery in the Nigeria Autonomous Foreign Exchange Market.

The CBN facilitated the sale of dollars to Bureau De Change (BDC) Operators at a rate of N1,251, as outlined in a circular issued by the apex bank. BDCs were directed to sell to eligible customers at a rate not exceeding 1.5 percent above the purchase price.