Emmanuel OchayiThe Nigerian naira appreciated to N1,635 per dollar in the parallel market on Tuesday, gaining N15 from the previous day’s exchange rate of N1,650.
Market observers say this development reflects a slight improvement in forex liquidity and demand-supply balance. The Central Bank of Nigeria (CBN) recorded an official exchange rate of N1,533.50 per dollar on Monday.
Join our WhatsApp ChannelTraders React to Naira Appreciation
A forex trader, Musa Bello, spoke on the impact of the naira’s recent movement. He said, “The market has been unpredictable, but today we see some relief. More forex is coming into the system, and traders are responding to this.”
Another trader, Chukwuma Okeke, expressed optimism but remained cautious. “The naira has gained, but we need to see if this trend will last. Many people are still uncertain about forex stability,” he said.
CBN Introduces FX Code to Enhance Market Stability
On Tuesday, the CBN launched the Nigeria Foreign Exchange (FX) Code, aimed at promoting transparency and professionalism in the forex market.
“The FX Code is designed to ensure ethical practices and market discipline,” a CBN spokesperson said. “This is part of broader reforms to stabilize the naira and enhance confidence in the financial system.”
Analysts believe this initiative, along with recent measures to boost forex inflows, may contribute to a more stable exchange rate in the long run.
READ ALSO: Naira Appreciates To N1,650/$1 As Dollar Weakens Globally
Market Analysis of Naira and Other Currencies
According to data, the naira’s appreciation on January 29, 2025, followed a series of fluctuations in the forex market.
For the US Dollar (USD):
- On January 28, the parallel market rate stood at N1,650, marking a 0.61% increase from the previous day.
- By January 29, the rate dropped to N1,635, reflecting a 0.92% decrease.
For the British Pound (GBP):
- The rate remained stable at N2,025 on January 28.
- On January 29, it increased slightly to N2,030.
For the Euro (EUR):
- The exchange rate was N1,695 on January 28 but appreciated to N1,670 on January 29, showing a 1.50% increase.
A forex analyst, Tunde Ayodele, explained, “These movements indicate a mix of market adjustments. The naira’s improvement shows a positive trend, but fluctuations are expected.”
CBN Policies Drive Forex Market Adjustments
The recent appreciation of the naira is linked to increased forex inflows from remittances and improved liquidity within the banking sector.
“Forex liquidity has improved due to inflows from diaspora remittances and foreign investments,” financial expert Amina Yusuf stated. “CBN’s intervention, including forex sales to Bureau de Change operators, is also playing a role.”
Several BDC operators confirmed receiving forex from the CBN, which has helped stabilize the exchange rate. A BDC operator, Ibrahim Ali, shared his experience. “We are getting more forex, and this is easing the pressure on the naira. If this continues, we may see further improvements,” he said.
Outlook for the Naira
Despite recent gains, market analysts warn that forex volatility remains a concern. Factors such as oil revenue inflows, inflation, and external reserves will influence the naira’s future performance.
“The naira has shown strength, but sustained stability depends on consistent policy measures,” economist Dr. Emeka Nwosu said. “If forex liquidity remains steady, we may see a gradual strengthening of the naira.”
Investors and businesses are advised to monitor market trends as the CBN continues its forex market reforms.
CBN’s Recapitalization Policy for BDC Operators
As part of its ongoing forex market restructuring, the CBN introduced a recapitalization policy in May 2024.
According to the policy:
- Tier-1 BDC operators must increase their minimum capital to N2 billion.
- Tier-2 operators must meet a minimum capital threshold of N500 million.
The CBN explained that this policy aims to strengthen the financial health of the sector and curb illegal forex trading.
“The recapitalization plan will ensure that only serious and well-funded players remain in the forex market,” a CBN official stated. “This will reduce speculation and enhance transparency.”
BDC Operators Expect a Stronger Naira in 2025
Several BDC operators are optimistic about the naira’s prospects in 2025.
A currency dealer, Abdulrahman Usman, said, “We believe the naira will strengthen further, especially with the government’s commitment to forex stability. Policies are being put in place to boost confidence in the market.”
Another operator, Ngozi Eke, added, “If forex inflows continue and the CBN maintains its current policies, we may see a better exchange rate for the naira.”
The naira’s recent appreciation to N1,635 per dollar reflects a positive shift in the forex market. While challenges remain, CBN policies and increased forex inflows may contribute to further stability. Traders, analysts, and businesses are closely watching the market as Nigeria continues its efforts to strengthen the naira and maintain economic stability.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
