Nigeria’s currency, the naira, surged to a seven-month high on Thursday, trading at N1,485.95 per dollar, marking a significant appreciation driven by the Central Bank of Nigeria’s (CBN) recent policy interventions.
This milestone brings the naira back to levels last seen on June 20, 2024, when it was N1,485.53 per dollar in the official market. The latest uptick reflects the impact of CBN’s foreign exchange (FX) reforms, which aim to stabilize the currency and boost investor confidence.
Naira Gains as Forex Market Reacts to CBN Policies
At the close of Thursday’s trading session, the naira gained 1.67%, appreciating by N24.8 from N1,510.72 per dollar recorded on Wednesday, according to data from the FMDQ Securities Exchange Limited.
During the trading day, authorized dealers quoted the highest exchange rate at N1,516 per dollar and the lowest at N1,470 per dollar on the Nigerian Foreign Exchange Market (NFEM).
Meanwhile, in the parallel market (black market), the naira experienced a slight depreciation, weakening by 0.6% (N10) as the dollar traded at N1,635 on Thursday, compared to N1,625 on Wednesday.
CBN Introduces New FX Code to Improve Transparency
As part of its ongoing efforts to enhance market stability, the CBN on Tuesday unveiled a new Foreign Exchange (FX) Code aimed at improving market transparency, liquidity, and participant conduct within Nigeria’s forex sector.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), explained the significance of this initiative, stating:
“The goal is to restore order in the forex market, which has been plagued by various disruptive practices. The CBN is working to clean up the system, and the more structured it becomes, the more stable the naira will be.”
Regulatory Framework and Compliance Expectations
While the CBN’s FX Code seeks to address key market concerns, the apex bank clarified that it is not an exhaustive rulebook. Instead, it provides guidelines for ethical market conduct, and financial institutions are expected to exercise sound judgment in areas not explicitly covered.
Backed by the CBN Act of 2007 and the Banks and Other Financial Institutions Act (BOFIA) of 2020, the FX Code mandates that:
- All forex market participants must assess their compliance and submit a report to the CBN by January 31, 2025.
- Each institution must develop and submit a compliance implementation plan, formally approved by its board of directors.
- Institutions must include meeting extracts where the compliance plan was reviewed and approved.
Outlook for the Naira
With these policy measures in place, analysts expect continued volatility in the forex market, but the CBN’s tightening regulations could lead to long-term stability. While external factors such as global economic trends and foreign investor confidence will still play a role, the FX Code is expected to bring greater discipline and transparency to Nigeria’s currency market.
