The Nigerian naira experienced a notable appreciation against the dollar yesterday, with the parallel market rate dropping from N1,430 per dollar on Monday to N1,350 per dollar. Similarly, in the Nigerian Foreign Exchange Market (NAFEM), the naira strengthened to N1,382.95 per dollar, marking a significant increase from the previous rate of N1,408.04 per dollar on Monday. This indicates a considerable appreciation of N25.09 for the naira.

As a result of this appreciation, the margin between the parallel market rate and NAFEM widened to N32.95 per dollar, compared to N21.96 per dollar recorded on Monday. Over the past month, the Nigerian naira has surged by 18.28 percent, reaching N1,408.04 per dollar on Monday from its low of N1,665.50 recorded on February 23, 2024, according to data from the FMDQ Securities Exchange.

The recent appreciation of the naira against the dollar is largely attributed to foreign exchange reforms implemented by the Central Bank of Nigeria (CBN). These reforms include the consolidation of exchange rate windows, liberalization of the FX market, resolution of FX backlog obligations for banks and airlines, and the implementation of various measures aimed at promoting market stability and transparency.

Key measures include the introduction of a Price Verification System (PVS), imposition of limits on banks’ Net Open Position, removal of the daily cap on remunerable Standing Deposit Facility (SDF) to N2 billion, and restructuring of the Bureau De Change (BDC) segment. Additional measures such as the removal of margin limits for International Money Transfer Operator (IMTO) remittances and the introduction of a two-way quote system have also been implemented to enhance market participation and price discovery.

Furthermore, the CBN sold dollars to Bureau De Change (BDC) Operators at a rate of N1,251, as outlined in a circular issued by the central bank. BDCs were directed to sell to eligible customers in line with these directives, indicating a concerted effort by the CBN to stabilize the foreign exchange market and ensure adequate supply of dollars to meet demand.

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