Nigerian Naira Records Significant Growth in Official Exchange, Gains Strength in Parallel Market

The official exchange rate has dipped below the N1,300 per dollar threshold for the first time since January 2024, marking a notable shift from its lowest point at N1,600 per dollar. In the Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira surged to N1,278.58 on Tuesday, April 2, 2024, compared to the N1,309 recorded prior to the Easter holidays on Thursday, March 29, 2024.

Analysts attribute this 21% recovery of the naira since March to a series of forex policies implemented by the Central Bank of Nigeria (CBN). Data from FMDQ reveals that traders quoted intraday highs of N1,312 per dollar and lows of N1,250 per dollar, with the forex market witnessing a daily turnover of $111.8 million, a decrease from the N857 million recorded on Thursday, March 29, 2024.

The exchange rate disparity between official and parallel markets narrowed to N130, the slimmest margin in recent days. Notably, the naira experienced significant gains in the parallel market, trading at N250 per dollar on Monday, April 1, 2024.

Furthermore, the naira rebounded from N1,915 per dollar in February within the Bureau de Change segment to N1,255. The Association of Bureaux de Change Operators of Nigeria (ABCON) highlights a gain of over N600 per dollar since their readmittance into the FX market by the CBN. Recently, the CBN sold $10,000 to each BDC operator at N1,251 per dollar, imposing a threshold to prevent excessive pricing.

Analysts suggest that CBN’s policies aimed at maintaining forex liquidity are proving effective. Chinenye Ijeh, a forex dealer and broker, emphasizes that these policies have bolstered the naira’s performance against major currencies, attributing Nigeria’s robust forex liquidity to intentional and well-thought-out measures by the CBN.

Moreover, the country has seen an increase in diaspora remittances, reaching approximately $1.5 billion in March. This surge is attributed to the closure of the significant disparity between official and parallel markets, making remittances via the black market less appealing to speculators.