The Nigerian Naira reached N1,520 per dollar in the parallel market, marking its strongest level this year, driven by foreign exchange (FX) reforms from the Central Bank of Nigeria (CBN).
On Tuesday, Lagos currency dealers quoted the Naira at N1,520 per dollar, reflecting renewed confidence in the currency due to CBN’s measures aimed at stabilizing the forex market.
The CBN bolstered liquidity through foreign exchange sales to Bureau De Change (BDC) operators and imposed tighter market regulations. Additionally, the launch of the Nigeria Foreign Exchange Code (FX Code) enhanced market transparency and curbed speculative practices.
Since its introduction in Abuja, the FX Code has encouraged a structured trading environment, prompting traders to offload dollar holdings due to stricter guidelines. The Naira closed at N1,520 to the dollar on Tuesday, maintaining its upward trend since the reforms.
Despite gains, official exchange rates at the Nigerian Foreign Exchange Market (NFEM) showed earlier depreciation. Rates dropped 5.86% to N1,385.96 per dollar in Q2 from N1,304.72 in Q1 and further declined to N1,541.94 by Q3, with the parallel market hitting N1,705.
In 2024, under Governor Olayemi Cardoso, the CBN removed interbank FX transaction caps, revoked 4,173 BDC licenses, and raised BDC capital requirements to N2 billion. Measures also included restricting foreign currency collateral for loans and forming a remittance task force to boost inflows.
To further enhance liquidity, the government revived Retail Dutch Auctions (RDAs) and issued a $500 million domestic dollar bond.
Looking ahead, the Nigerian Economic Summit Group (NESG) forecasts an N1,300 per dollar average rate in 2025, supported by increased forex earnings from oil, manufacturing, and agriculture.
NESG Chairman Olaniyi Yusuf recognized the naira’s 41.4% depreciation in 2024 but praised CBN’s efforts to narrow exchange rate gaps. NESG also predicts 5.5% GDP growth and a 24.7% drop in inflation by 2025 if reforms continue.
CBN Governor Cardoso remains optimistic, attributing improvements to policy reforms and increased inflows from International Money Transfer Operators (IMTOs). He reaffirmed the CBN’s commitment to transparency and ethical practices through the FX Code