The Naira has been gaining grounds against the Dollar in recent weeks, reflecting significant shift in the country’s foreign exchange market.
In the parallel market on Friday, the Naira appreciated by N20, trading at N1,540/$1 from N1,600/$1 on Thursday. However, at the official exchange rate, it slightly weakened to N1,499.76/$1 from N1,498.95/$1 on Thursday, according to FMDQ data. Economic Confidential reports that this development underscores the evolving forex dynamics driven by policy changes and market forces.
According to findings by Economic Confidential, a combination of policies and measures by the country’s monetary and fiscal authorities have been responsible for the development.
The CBN has intensified monitoring of forex activities, discouraging hoarding and speculative trading.
A key driver of the Naira’s recent appreciation is the limited availability of the currency in circulation. High level sources informed Economic Confidential that the administration is deliberately controlling the volume of Naira in circulation to force people with Dollars to release them. This, the source said, is “working like magic”
The CBN has also implemented regulatory measures aimed at stabilising the forex market. Economic Confidential can confirm that new guidelines for Bureau de Change (BDC) operators have tightened oversight, ensuring foreign exchange transactions align with official policies.
Increased dollar liquidity in banks has further eased access to Business Travel Allowance (BTA) and Personal Travel Allowance (PTA), reducing pressure on the parallel market.
The introduction of the Nigeria Foreign Exchange Code (FX Code) is equally imposing transparency in forex dealings. The CBN has warned that any violations of these new standards would be met with penalties under the CBN Act 2007 and the Banks and Other Financial Institutions Act (BOFIA) 2020.
Another source who pleaded anonymity told our correspondent that the government will not relent in its efforts to force down the value the Dollars against Naira, saying the target is N1000 to a Dollar by the middle of the year.
Global factors are also influencing Nigeria’s forex market. The U.S. Dollar index recently dipped to 107.81 points after peaking at 109.88, reflecting uncertainties in American trade policies. With proposed tariffs on Canada, Mexico, and China, concerns over inflation and Federal Reserve interest rate decisions could indirectly impact Nigeria’s currency valuation.
Another factor is a temporary decline in demand, partly due to the Chinese New Year holiday; has forced speculators to offload their Dollar reserves. (PR Nigeria)
