Naira strengthens against major currencies amid CBN policy interventions

The Nigerian naira made notable gains against the U.S. dollar in the parallel market on Friday, closing at N1,610/$1, an improvement from N1,630/$1 recorded on Thursday.

The British pound also weakened slightly against the naira, trading at N2,000/£1 compared to N2,010/£1 the previous day, reflecting a 0.50% decline.

Similarly, the euro depreciated, closing at N1,655/€1, marking a 0.91% appreciation of the naira against the European currency.

While the parallel market showed signs of naira appreciation, the official exchange rate provided by the Central Bank of Nigeria (CBN) as of Thursday stood at N1,493/$1.

By Friday, the CBN’s rates indicated the naira was trading at N1,507.40/$1 (buying rate) and N1,508.40/$1 (selling rate).

The improvement in the parallel market rate suggests an increase in dollar supply or a reduction in speculative pressure on the naira.

Analysts attribute this trend to recent CBN interventions aimed at stabilizing the currency, including policy adjustments in the foreign exchange (FX) market, regulations on Bureau De Change operators, and efforts to boost dollar liquidity in official transactions.

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Earlier this week, CBN Governor Olayemi Cardoso reaffirmed the apex bank’s resolve to enforce ethical conduct and transparency in the forex market.

He warned that any violation of the newly launched Nigeria Foreign Exchange (FX) Code would attract severe penalties.

“The FX Code marks a new era of compliance and accountability. It is not just a set of recommendations; this is an enforceable framework.

Under the CBN Act 2007 and BOFIA Act 2020, violations will be met with penalties and administrative actions,” Cardoso said.

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The FX Code establishes clear and enforceable standards for ethical behavior, governance, and compliance in Nigeria’s forex market.

Analysts view it as a landmark initiative designed to curb speculative trading and ensure stability in the exchange rate.

Nigeria’s foreign exchange reserves have witnessed a notable decline, falling by $832.62 million between January 6 and January 21, 2025.

This decline follows a broader trend observed in April 2024, when FX reserves plunged by approximately $2.16 billion in just 29 days.

The reduction in reserves has raised concerns about the CBN’s ability to sustain its forex interventions and maintain exchange rate stability.

However, the apex bank remains committed to adopting measures that promote long-term economic growth and naira stability.

While the naira’s appreciation in the parallel market is a positive development, continued vigilance is necessary to sustain the momentum.

The CBN’s proactive policies, alongside structural economic improvements, will play a critical role in ensuring long-term stability in Nigeria’s forex market.