The naira appreciated on Friday to N1,440 per dollar from N1,450 per dollar on Thursday. Similarly, the naira appreciated N1,435.53 per dollar in the Nigerian Foreign Exchange Market (NAFEM). Data from FMDQ showed that the indicative exchange rate for NAFEM fell to N1,435.53 per dollar from N1,461.9 per dollar on Thursday, indicating N26.37 appreciation for the naira. Consequently, the gap between the official and parallel market exchange rates narrowed to N4.47 per dollar yesterday from N11.9 per dollar on Thursday.

This comes after the Central Bank of Nigeria, CBN on Wednesday announced limits on how much banks can hold in foreign currencies and expressed concern about the growth of forex exposures on their balance sheets after the local currency tumbled against the U.S. dollar. In a new circular (TED/FEM/FPC/GEN/001/003) dated January 31, 2024, the CBN announced a significant change in the regulations governing exchange rate quotes by International Money Transfer Operators. Previously, IMTOs were required to quote rates within an allowable limit of -2.5 percent to +2.5 percent around the previous day’s closing rate of the Nigerian foreign exchange market, according to the circular TED/FEM/PUB/FPC/001/009 dated September 13, 2023.

In a move aligning with the CBN’s commitment to liberalise the Nigerian foreign exchange market, the new circular permits IMTOs to quote exchange rates for naira payout to beneficiaries based on prevailing market rates at the Nigerian foreign exchange market. This is to be done on a willing seller, willing buyer basis. The circular, signed by Hassan Mahmud, director of the trade and exchange department, supersedes the previous circular (TED/FEM/PUB/FPC/001/009) issued on September 13, 2023. All Authorised dealers, International Money Transfer Operators, and the general public are advised to take note of this development and ensure compliance with the revised regulations. The CBN’s decision reflects ongoing efforts to adapt and enhance the dynamics of the Nigerian foreign exchange market, the circular stated.

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