The Nigerian naira has been on a winning streak against the United States dollar, much to the delight of Nigerians. On Wednesday, the naira continued its upward trend, gaining N16 or 1.26 per cent at the Nigerian Autonomous Foreign Exchange Market. The dollar was quoted at N1,262.85, a significant improvement from the previous day’s closing rate of N1,278.58.
This positive movement in the exchange rate can be attributed to the various foreign exchange policies implemented by the Central Bank of Nigeria. The CBN has been working to boost dollar supply and enhance transparency in the FX market. One of the key reforms introduced was the abolition of market segmentation in June 2023, consolidating all markets into the Investors & Exporters window, now known as the Nigerian Autonomous Foreign Exchange.
In January 2024, the CBN directed International Money Transfer Operators to quote exchange rates based on prevailing market prices for naira payouts. Subsequent reforms in February and March further contributed to reducing the volatility of the naira and improving transparency in the FX market.
Currency traders have noted a decrease in demand for the greenback, leading to the appreciation of the naira. The CBN’s decision to sell foreign exchange directly to operators has also played a significant role in stabilizing the exchange rate. This has resulted in a decrease in the intra-day high and low rates, with the average daily turnover increasing to $116 million.
At the parallel market, the naira strengthened to N1,250 against the dollar, marking a 0.8 percent gain from the previous day. Overall, the naira has gained 46 percent of its value against the dollar since February 20, 2024, when it hit its lowest point of N1,825/$ on the parallel market.
The positive movement of the naira against the dollar is a testament to the effectiveness of the CBN’s policies and the resilience of the Nigerian economy. With continued reforms and strategic interventions, the naira is expected to maintain its upward trajectory, bringing stability and confidence to the FX market.
