Naira shows mid-week stability at N1,605/$1 amid FX market adjustments

The exchange rate between the naira and the US dollar exhibited stability mid-week, trading at N1,605/$1 in the parallel market on Wednesday, February 5, 2025.

This comes after fluctuations in the foreign exchange (FX) market earlier in the week, signaling potential improvements in forex liquidity and market confidence.

According to data obtained by Nairametrics, the naira was exchanged at N1,605/$1 (selling) and N1,602/$1 (buying) on Monday, February 3, 2025.

However, a slight depreciation occurred on Tuesday, February 4, 2025, with the exchange rate reaching N1,610/$1 before recovering to N1,605/$1 by Wednesday. This week’s performance marks a significant improvement compared to the previous week, when the naira traded at weaker levels.

Between Monday and Wednesday last week, the parallel market rates stood at N1,660/$1 (Monday), N1,650/$1 (Tuesday), and N1,635/$1 (Wednesday). The recent strengthening of the naira indicates a potential easing of forex pressures, attributed to various market interventions.

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In the official forex market, the naira maintained stability, closing at N1,499/$1 on both Monday and Tuesday, according to the Central Bank of Nigeria (CBN). This suggests steadiness in the regulated FX market, with no significant fluctuations observed.

 Last week, the official market witnessed a gradual improvement, with rates of N1,533.50/$1 on Monday, N1,520/$1 on Tuesday, and N1,506/$1 on Wednesday.

Beyond the US dollar, the naira also recorded movements against other major currencies, including the British pound (GBP) and the euro (EUR), underscoring a broader trend of fluctuating forex market conditions.

Analysts attribute the relative stability in the FX market to improved dollar supply, CBN’s strategic interventions, and reduced speculative activities in the parallel market. Some experts suggest that the CBN’s extension of the deadline for Bureau de Change (BDC) operators to access the Nigerian Foreign Exchange Market (NFEM) has contributed to easing pressure on the naira.

In a circular signed by Dr. W. J. Kanya, Acting Director of the Trade & Exchange Department at the CBN on Monday, the apex bank announced the extension of the deadline from January 31, 2025, to May 30, 2025. This move is expected to enhance liquidity and provide stability in the FX market.

The Association of Bureau de Change Operators of Nigeria (ABCON) welcomed the extension, with its President, Dr. Aminu Gwadabe, stating that the move reflects the CBN’s commitment to stabilizing the FX market and promoting inclusiveness through the Electronic Foreign Exchange Matching System (EFEMS).

Despite the mid-week stability, market watchers remain attentive to external factors such as global crude oil prices, Nigeria’s foreign reserves, and evolving CBN policy directives, all of which could influence future exchange rate movements. As the week progresses, stakeholders will be closely monitoring the market to determine if the naira will sustain its recent gains or face renewed volatility in the FX space.

For now, businesses and individuals engaged in forex transactions can find some relief in the naira’s mid-week stability, though continued vigilance is required in the ever-evolving currency market landscape.