By Milcah Tanimu
The Nigerian Naira reached an eight-month high of 1,120 against the US dollar on the parallel market, buoyed by recent foreign exchange (FX) reforms by the Central Bank of Nigeria (CBN) that have bolstered dollar liquidity.
This surge marks a substantial gain of 62.95 percent (N705) against the dollar since February 2024, highlighting the impact of the CBN’s interventions in the FX market.
Traders attributed the dollar’s decline to diminished demand and a calm market environment during the holidays, with sufficient dollar supply contributing to the Naira’s strength.
Despite a decline in external reserves, the Naira strengthened to 1,230.61 per dollar on the official FX market, signaling resilience amid economic challenges.
The CBN’s recent directive to Bureau De Change (BDC) Operators to adjust the exchange rate to N1,101 per dollar, coupled with plans to sell $15.88 million to eligible BDCs, is expected to further boost dollar supply.
In line with efforts to stabilize the Naira, the CBN implemented various reforms, including the consolidation of FX segments, restriction on forex spread by BDCs, and imposition of limits on banks’ foreign currency positions.
These measures have contributed to reduced volatility in the Naira, with analysts expressing optimism about stability in the FX market amid improved oil production and high-interest rates.
Overall, the Naira’s surge reflects the positive impact of CBN’s FX reforms in unlocking liquidity and fostering stability in the foreign exchange market.
