Naira surges as CBN launches FX code to boost transparency in foreign exchange market

In what appears to be an immediate reaction to the launch of the Nigeria Foreign Exchange (FX) Code by the Central Bank of Nigeria (CBN), the naira recorded a significant appreciation against major foreign currencies across both the official and parallel markets on Tuesday, January 28, 2025.

The FX Code, officially introduced by the CBN in Abuja on the same day, is aimed at promoting transparency, ethical conduct, and efficiency in Nigeria’s foreign exchange ecosystem.

CBN Governor, Mr. Olayemi Cardoso, emphasized during the launch that the initiative was designed to set enforceable standards to curb past malpractices and prevent the recurrence of systemic abuses that have long plagued the FX market.

Following the launch, the naira showed remarkable resilience, appreciating significantly against the US dollar and other major currencies.

According to data from the Financial Markets Dealers Quotations (FMDQ) Securities Exchange, the naira strengthened to N1,522.28/$1 at the official market, marking an N11 gain from its previous rate of N1,533.63/$1 recorded on Monday, January 27, 2025.

Similarly, in the parallel market, the naira gained N10 against the dollar, trading at N1,640/$1, compared to the previous day’s rate of N1,650/$1.

READ ALSO: Experts forecast optimism as Naira records slight gains against Dollar

The local currency also showed gains against other major currencies: British Pound (£): Appreciated by N5, trading at N2,020/£1, up from N2,025/£1; Euro (€): Strengthened by N15, reaching N1,680/€1, from N1,695/€1; Canadian Dollar (CA$): Remained stable at N1,280/CA$1.

Financial analysts believe the introduction of the FX Code has injected a new level of confidence into Nigeria’s currency market, as traders and investors responded positively to the CBN’s commitment to restoring order and reducing speculative activities.

“This move by the CBN is a strong signal that the regulator is serious about fostering discipline and accountability in the FX market,” said Dr. Olumide Adeyemi, an economic analyst. “The appreciation of the naira is a reflection of market optimism that the new framework will address past inefficiencies.”

Market observers anticipate continued stability in the coming weeks as the full impact of the FX Code unfolds, with the CBN expected to implement stricter oversight measures to ensure compliance.

As Nigeria’s foreign exchange market enters this new phase of reform, all eyes remain on how the naira will respond in the days ahead, particularly amid evolving global economic dynamics and domestic fiscal policies.