Naira Strengthens to 1,494.03/$ at Official and Parallel Market

The naira gained value, reaching 1,494.03/$ at the official market on Thursday, according to data from FMDQ Securities Exchange Limited. In parallel, it appreciated at the black market, rising to 1,510.00/$, narrowing the gap between the two markets to 15.5/$.

The narrowing difference in exchange rates between the official and parallel markets follows the Central Bank of Nigeria’s (CBN) policy interventions. CardinalStone Research’s daily market report noted that the naira strengthened by 1.04% at the official window to 1,494.03/$, while the parallel market saw a 1.66% increase, reaching 1,510.00/$.

The naira had shown a continued upward trend in the previous day’s trading. On FMDQ, the naira rose by 0.05% to 1,509.53/$, and in the parallel market, it appreciated by 0.65% to 1,535.00/$.

The CBN’s recent directive, which extends dollar sales to Bureau De Change (BDC) Operators until May 30, 2025, has been identified as a key factor contributing to the naira’s appreciation.

Aminu Gwadebe, President of the Association of Bureau De Change Operators, expressed optimism in an interview with The PUNCH. He remarked, “The pick-up of the interbank proceeds to Bureaux de Change as directed by CBN is helping to inject liquidity and reduce panic in the market.”

Meanwhile, the naira’s strengthening coincided with the decision of the CBN’s Monetary Policy Committee (MPC) to keep the benchmark rate at 27.50% along with other key monetary parameters. The MPC maintained the asymmetric corridor around the MPR at plus 500 and minus 100 basis points, with the cash reserve ratio set at 50% for deposit money banks and 16% for merchant banks, and a liquidity ratio of 30%.

When explaining the rationale for holding rates, CBN Governor Olayemi Cardoso, following the MPC meeting, emphasized the stability of the foreign exchange market. He said, “At this meeting, the Monetary Policy Committee noted with satisfaction recent macroeconomic developments which are expected to positively impact price dynamics in the near to medium term. These include the stability in the foreign exchange market with the resultant appreciation of the exchange rate.”

The Governor also highlighted the benefits of improvements in the external sector, which contribute to exchange rate stability, noting the convergence of rates between the Nigeria Foreign Exchange Market and the Bureau de Change. He encouraged the bank to continue efforts to enhance market liquidity.

The MPC acknowledged the CBN’s recent initiatives, such as the Electronic Foreign Exchange Matching System (B-Match) and the Nigeria Foreign Exchange Code, aimed at promoting transparency, ethics, and credibility in the market. The committee concluded that, due to the major policy measures implemented by both monetary and fiscal authorities, the flow of foreign direct investments, portfolio investments, and remittances from the diaspora is expected to rise as investor and stakeholder confidence improves.