The Nigerian naira recorded a significant appreciation against the US dollar, trading at N1,550 per dollar in the parallel foreign exchange (FX) market on Thursday, marking its strongest performance in seven months.
This latest gain represents the naira’s best showing since July 9, 2024, when it exchanged at N1,540 per dollar. According to currency traders, also known as Bureau de Change (BDC) operators, the buying rate for the dollar stood at N1,580, while the selling price was N1,550—leaving a margin of N30.
Market observations indicate that the naira has been on a steady appreciation trajectory since the beginning of February. The exchange rate stood at N1,603 per dollar on February 3 before strengthening to N1,593 on February 4 and further appreciating to N1,580 on February 5. This upward trend signals a 4.73 percent appreciation compared to the N1,627 per dollar recorded on January 30.
Diverging Trends in the Official Market
Despite the gains in the parallel market, the naira depreciated slightly at the official FX window, where it traded at N1,500 per dollar on Thursday, down by 0.46 percent from N1,493 per dollar on January 30.
Data from FMDQ Exchange, which oversees official FX trading in Nigeria, revealed that the highest exchange rate recorded during Thursday’s trading session was N1,504 per dollar, while the lowest stood at N1,497 per dollar. This development has widened the gap between the parallel market and the official exchange rate to N50 per dollar.
CBN’s Regulatory Moves and Impact on the FX Market
The Central Bank of Nigeria (CBN) has continued its intervention in the FX market through regulatory measures aimed at stabilizing the naira. On December 20, 2024, the apex bank directed BDC operators to source foreign exchange from commercial banks between December 19, 2024, and January 30, 2025. However, this deadline was extended to May 30, 2025.
In its latest regulatory action, the CBN, on February 6, introduced a new policy limiting BDC operators to purchasing a maximum of $25,000 per week from a single bank. Additionally, BDCs are now required to select a single financial institution from which they will procure their weekly FX allocations.
Market analysts suggest that these measures are part of the CBN’s broader strategy to curb currency speculation and enhance the stability of the naira in both official and parallel markets. However, traders remain cautious about the long-term effectiveness of these interventions in addressing Nigeria’s lingering FX challenges.
Outlook on the Naira’s Performance
The recent appreciation of the naira in the parallel market is seen as a positive development, signaling improved liquidity and confidence in the local currency. Economic analysts believe that sustained CBN interventions, coupled with increased foreign exchange inflows, could further strengthen the naira in the coming weeks.
Nonetheless, the widening disparity between the official and parallel market rates remains a concern, as businesses and individuals continue to navigate the complexities of Nigeria’s forex market.
As the CBN’s new policies take effect, stakeholders will be closely monitoring the impact on exchange rate stability and overall economic performance.
