The Naira experienced a fast appreciation in the foreign exchange (FX) market following the Central Bank of Nigeria (CBN)’s introduction of a new Foreign Exchange (FX) Code aimed at enhancing market transparency and liquidity. Over the past two days, the Dollar has weakened across various FX trading platforms, reflecting increased confidence in the official market after the policy announcement.
In the official market, the naira gained 1.5% (N22.91), with the dollar quoted at N1,510.72 on Wednesday, compared to N1,533.63 on Monday before the FX Code was launched. This data, sourced from FMDQ Securities Exchange Limited, indicates a steady appreciation. Compared to last Friday’s rate of N1,531.20, the naira strengthened by N20.48, marking a 1.35% gain within three trading days in the Nigerian Foreign Exchange Market (NFEM). On a daily basis, the local currency appreciated by 0.79% (N11.96) on Wednesday, closing at N1,522.68 on Tuesday.
In the parallel market, commonly known as the black market, the naira closed at N1,625 on Wednesday, a day after the CBN rolled out the FX Code. The local currency recorded a 0.55% (N9) appreciation, as the dollar traded at N1,625 compared to N1,634 on Tuesday. Despite the naira’s recent gains, Nigeria’s external reserves have fallen by $1.13 billion year-to-date, dropping from $40.92 billion on January 6, 2025, to $39.79 billion as of January 28, 2025, according to CBN data.
The CBN’s introduction of the FX Code is part of a broader effort to improve transparency, liquidity, and market efficiency in Nigeria’s foreign exchange sector. The code serves as a framework for best practices, aligning Nigeria’s FX market with global standards while addressing risks within the country’s financial ecosystem.
As the regulatory body overseeing Nigeria’s monetary landscape, the CBN developed the FX Code to bolster market integrity and ensure smoother operations within the foreign exchange system. The policy is expected to provide clear guidelines for FX participants, reducing speculation and enhancing overall market confidence.
With the naira showing signs of stability and resilience, the coming weeks will determine the long-term impact of this policy shift on Nigeria’s foreign exchange market.
