Naira Gains to N1,640/$ as CBN Reforms Boost Stability

 

The Naira appreciated to N1,640 per dollar in the parallel market on Tuesday, strengthening from N1,655 per dollar recorded on Monday.

Similarly, data from the Central Bank of Nigeria (CBN) showed that the official exchange rate at the Nigerian Foreign Exchange Market (NFEM) improved to N1,526.3 per dollar, compared to N1,533.5 per dollar on Monday, reflecting a N7.2 gain for the local currency.

As a result, the exchange rate margin between the parallel market and the official NFEM rate narrowed to N113.7 per dollar, down from N121.5 per dollar recorded on Monday.

The Naira’s recent appreciation follows a period of volatility over the past 18 months, marked by sharp declines. However, since December 2023, the currency has shown relative stability, fluctuating within a narrow range of 1,550 to 1,520 per dollar.

 

CBN Reforms Drive Naira Stability

Analysts attribute the Naira’s improved performance to ongoing foreign exchange (FX) reforms by the CBN. Key initiatives include the Electronic Foreign Exchange Matching System (EFEMS) introduced in December 2023 and the FX Code, which is set to be launched by the end of January 2024.

Speaking on the impact of these reforms, Taiwo Oyedele, Chairman of Nigeria’s Fiscal Policy and Tax Committee, noted that the new FX Code would enhance market transparency. He also stated that the policy has helped remove approximately $20 million daily from speculative trading.

 

CBN Governor: Naira Now More Competitive for Investors

CBN Governor, Olayemi Cardoso, reaffirmed that the exchange-rate reforms have strengthened the naira and created opportunities for investors.

“We’ve found ourselves in a situation where the foreign exchange rate has adjusted,” Cardoso said during a virtual briefing organized by the Nigeria Economic Summit Group (NESG).

He further noted that last year’s sharp depreciation of the naira has now presented an opportunity for investors to capitalize on a more competitive currency.