The Nigerian Naira has surged to an eight-month high of 1,120 against the US dollar on the parallel market, commonly referred to as the black market.
This significant appreciation comes on the heels of a series of foreign exchange (FX) reforms initiated by the Central Bank of Nigeria (CBN), which have effectively unlocked dollar liquidity within the economy.
According to data compiled from online platforms and street traders, the current exchange rate reflects a gain of 62.95% for the Naira against the dollar compared to its level of 1,825 per dollar in February 2024.
Market sentiment suggests that the recent strengthening of the Naira can be attributed to a subdued demand for the US dollar, coupled with ample liquidity in the market, particularly during the holiday period.
Despite a decline in external reserves, Nigeria’s currency strengthened to 1,230.61 per dollar on the official FX market before the holidays.
The recent uptick in the Naira’s value follows the CBN’s decision to review the exchange rate for Bureau De Change (BDC) Operators to 1,101 per dollar from 1,251 per dollar.
Also, the CBN announced plans to sell $15.88 million to 1,588 eligible BDCs, further bolstering dollar liquidity in the market.
The CBN’s proactive approach to FX management, including the resolution of foreign exchange backlogs amounting to US$7 billion, has instilled confidence among investors and market participants.
Furthermore, the apex bank’s commitment to implementing reforms aimed at enhancing transparency and efficiency in the FX market has yielded positive results.