The naira wrapped up the trading week on a positive note, strengthening to N1,531 per dollar in the official foreign exchange (FX) market on Friday. This represents a modest improvement compared to the previous week’s performance.
According to data from the Central Bank of Nigeria (CBN), the naira appreciated by 1.1 percent on a week-on-week basis, moving from N1,548 recorded the prior Friday to the current rate of N1,531. Daily trading also saw the currency gaining N17.50, climbing from Thursday’s rate of N1,548.50. The highest exchange rate quoted by authorized dealers on Friday stood at N1,550, showing a slight improvement from the previous week’s peak of N1,552. Additionally, the lowest official market rate hit N1,515, reflecting a N25.20 gain compared to the earlier N1,540.20.
In the parallel market, commonly referred to as the black market, the naira appreciated by N20, with the dollar exchanging at N1,660 on Friday compared to N1,680 the previous week.
Looking forward, the Central Bank of Nigeria is gearing up to introduce the Nigerian Foreign Exchange (FX) Code on Tuesday. This initiative aims to establish ethical standards for authorized FX dealers, ensuring responsible market operations.
CBN’s FX Market Reforms and Upcoming Launch
The official unveiling of the FX Code is scheduled for Tuesday, January 28, 2025, at the CBN headquarters in Abuja. This launch is part of the bank’s broader strategy to enhance governance and transparency in the FX market. The initiative builds on previous regulatory measures, such as the updated guidelines introduced in November 2024.
One key requirement under the revised regulations mandates that financial institutions’ boards, CEOs, and compliance officers must provide an annual certification of their compliance with the Nigeria FX Code. This move aims to reinforce market integrity and regulatory adherence.
The updated guidelines are set to advance Nigeria’s FX market, following the recent unification of multiple FX market segments. The new directives replace previous circulars, including those issued since June 2023 and earlier ones dating back to 2017.
Under the updated framework, authorized FX dealers are expected to facilitate transactions for businesses and individuals while adhering to regulatory guidelines. They must ensure due diligence, maintain transparency in pricing, and enhance market access through digital platforms. All FX transactions must strictly occur via authorized channels, with any dealings through unapproved intermediaries explicitly prohibited.
Implications for BDC Operators and Other Market Participants
The new regulations also impact Bureaux De Change (BDC) operators, who are permitted to source FX from authorized dealers to meet customer demands within specified limits. Similarly, FX dealings by International Money Transfer Operators (IMTOs) and other authorized entities must strictly align with licensing terms and the Nigeria FX Code.
Overall, these measures are designed to foster a more stable and transparent foreign exchange environment, ensuring compliance with regulatory frameworks while enhancing market efficiency.
