Naira Rises Further in FX Markets, Traders Quote New Exchange Rate
- The Naira appreciated against the US dollar in the Nigerian Foreign Exchange Market (NAFEM) again.
- This marks the third consecutive appreciation for the week, following the CBN’s decision to allow BDCs to participate in the official market
- Experts have shared their expectations for the Naira after the CBN’s BDC decision
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Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The Nigerian Naira strengthened against major currencies on Wednesday following the Central Bank of Nigeria’s (CBN) decision to allow licensed Bureau de Change (BDC) operators to participate in the official foreign exchange market.
In the Nigerian Foreign Exchange Market (NFEM), the Naira appreciated by N2.07 or 0.15% to N1,348.95 per US dollar from N1,351.02 on Tuesday.
Source: Getty Images
It also gained N6.46 against the pound sterling to N1,840.11/£1 and N6.36 on the euro to N1,600.13/€1.
At the GTBank FX counter, the Naira gained N5 to settle at N1,358/$1, while the parallel market rate remained unchanged at N1,430/$1.
Snapshot of latest exchange rates
- CFA: N2.45
- Yuan/Renminbi: N195.08
- Danish Krona: N214.18
- Yen: N8.77
- Riyal: N359.68
- South African Rand: N84.74
- US Dollar: N1348.95
- Pounds Sterling: N1840.11
- Swiss Franc: N1750.52
- UAE Dirham: N367.23
- Euro: N1600.13
CBN allows BDCs to buy dollars at banks
The naira’s appreciation comes after the CBN announced that Bureau de Change operators can now buy dollars from authorised dealer banks.
According to a circular signed by Musa Nakorji, Director of the CBN’s Trade and Exchange Department, on Tuesday, February 10 BDCs can purchase up to $150,000 weekly from the NFEM.
The CBN also set strict reporting and transparency requirements for BDCs. Licensed operators must submit timely electronic returns, sell unutilised balances within 24 hours, and conduct settlements exclusively through accounts with licensed financial institutions. Cash settlements are limited to a maximum of 25% per transaction.
Experts react to the naira movement
The policy aims to improve liquidity in the retail segment and meet legitimate forex needs.
Reacting to the move, financial market analysts said the policy could further strengthen the domestic currency.
Aminu Gwadabe, president of the Association of Bureau De Change Operators of Nigeria (ABCON), also said:
“The new directives will increase dollar liquidity at the critical retail end of the market and provide a reliable source of dollars to the operators.
“In a similar vein, they are expected to foster positive market sentiment and boost investor confidence in the BDC sub-sector and the broader financial industry in Nigeria.”
Also, Tunde Amolegbe, CEO of Arthur Stevens Asset Management, said a firmer Naira would benefit companies with significant foreign currency-denominated inputs.
He said:
“Expect further strengthening of the Naira against the US dollar, which will be positive for companies in the consumer goods and industrial sectors."
Source: Getty Images
Ayotunde Olubunmi, Head of Financial Institutions at Agusto & Co., described the development as part of broader CBN efforts to reduce distortions in the forex market, particularly the gap between official and parallel rates.
Olubunmi said:
“Increasing liquidity in the BDC segment should reduce speculative pressure, narrow spreads, and promote a more unified exchange rate framework."
Why are foreign reserves important?
Earlier, Legit.ng provided an insight on how the Foreign reserves serve as a buffer to support the stability of the Nigerian currency in the international foreign exchange market.
When the CBN intervenes in the foreign exchange market, it uses its foreign reserves to influence the supply and demand of the Naira.
The foreign reserves also serve as a means to protect against external shocks and ensure the country's ability to meet its international obligations.
Source: Legit.ng
