The Naira has continued its upward trajectory, trading around N1,590/$ in the parallel market as the impact of the Central Bank of Nigeria (CBN)’s market reforms begins to take effect.
The currency’s appreciation follows the launch of the Nigeria Foreign Exchange (FX) Code, which has introduced new regulatory measures aimed at ensuring stability and transparency in the FX market.
In the official market, the naira strengthened to N1,475/$ on Friday, according to data from the Nigeria Foreign Exchange Market (NAFEM). Earlier in the week, the currency had traded at N1,520/$ before appreciating to N1,506/$ on Wednesday and N1,493/$ on Thursday.
The President of the Association of Bureaux de Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, attributed the naira’s recent rally to the CBN’s strategic policy interventions and the growing confidence in the foreign exchange market.
“The ongoing rebound indicates that the CBN policies and reforms are working,” he said.
He emphasized that the naira recorded its strongest performance in seven months, a development that underscores the effectiveness of recent FX market measures.
FX Code and Market Reforms Drive Confidence
The appreciation of the naira comes on the heels of the CBN’s launch of the FX Code, which became effective on December 2, 2024. The policy is designed to curb market distortions, eliminate systemic abuses, and enhance transparency in FX transactions.
According to CBN Governor Yemi Cardoso, unethical behavior in the market had previously eroded public trust in the naira, contributing to exchange rate instability. The FX Code, he noted, is part of broader reforms aimed at restoring order to the market.
“Reforms including discontinuation of quasi-fiscal interventions, unifying the exchange rate windows, clearing a backlog of foreign exchange commitments, and recalibrating monetary policy tools were all necessary to redirect the course of our economy, restore order and credibility to our FX market and refocus the CBN on its core mandates,” Cardoso stated.
He reiterated the apex bank’s zero-tolerance stance against attempts to manipulate the FX market, warning that stringent measures would be enforced against any violations.
ABCON Calls for Policy Review in BDC Sector
Despite commending the CBN’s efforts, Gwadabe also called for a downward review of the capital requirements for Bureaux de Change (BDC) operators, stressing that many businesses are struggling to meet the financial obligations under the new regulatory framework.
He urged the CBN to grant ABCON self-regulatory status to enhance market discipline, sanction non-compliant operators, and promote industry-wide transparency through technology-driven solutions.
“Granting self-regulatory status to ABCON will enable the group to sanction erring operators on non-compliance and enhance compliance with regulatory guidelines,” he stated.
FX Market Stabilization and Future Outlook
Market analysts have credited the rising investor confidence, increased FX supply through banks, and improved oil and gas investments as key factors bolstering the naira’s resurgence. The CBN’s crackdown on speculative demand and efforts to streamline diaspora remittances have also played a role in strengthening market liquidity.
While the naira remains undervalued relative to long-term projections, financial experts expect further stability in the coming months as the CBN sustains its reforms. Gwadabe noted that addressing BDCs’ operational challenges and ensuring adequate FX supply to the retail market would further consolidate the naira’s gains.
The CBN, on its part, has reaffirmed its commitment to maintaining a market-driven exchange rate regime, ensuring that Nigeria’s FX market remains transparent, efficient, and resilient against external shocks.
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