••Currency Hits Highest Point Since June 2024 Amidst Ongoing FX Market Overhaulz
By Anastasia John E.
– The Nigerian Naira has shown significant signs of recovery, closing January 2025 at ₦1,475/$1 at the Nigerian Autonomous Foreign Exchange Market (NAFEM). This represents the Naira’s strongest performance since June 2024, when it reached ₦1,473/$1. The January closing rate marks a substantial gain from the ₦1,535/$1 closing rate recorded on December 31, 2024, reflecting a ₦60 increase or a 3.91% appreciation month-on-month.
Throughout January, the Naira traded between ₦1,560 and ₦1,506 against the dollar, strengthening further in the final days of the month to close at ₦1,475. While year-on-year comparisons show a modest difference of approximately 1.33% compared to January 2024’s NAFEM closing rate of ₦1,455.59/$1 (according to Nairametrics), the recent gains signal positive momentum.
Analysts caution that despite the positive trend, the foreign exchange market remains susceptible to fluctuations driven by external factors like oil prices, remittance inflows, and investor confidence. Continued monitoring and strategic interventions by the Central Bank of Nigeria (CBN) are deemed crucial for sustained stability.
The Naira’s improved performance comes amidst a series of ongoing reforms and policy measures implemented by the CBN to stabilize the currency and sanitize the FX market. These include:
- Stricter Regulations for BDCs: The CBN has intensified its oversight of Bureau De Change (BDC) operators, aiming to curb speculative practices and enhance transparency.
- Increased FX Liquidity: The central bank has taken steps to boost dollar supply in the official market to meet legitimate demand and reduce pressure on the exchange rate.
- Introduction of the FX Code: CBN Governor Olayemi Cardoso recently unveiled the Nigeria Foreign Exchange (FX) Code, a landmark initiative designed to enforce ethical conduct, transparency, and compliance in the FX market. Cardoso emphasized that violations of the FX Code will be met with severe penalties under the CBN Act 2007 and BOFIA Act 2020.
- BDC License Fee Waiver: The CBN also announced a waiver of the 2025 non-refundable annual license renewal fee for BDC operators, a move aimed at easing their financial burden and supporting the transition to the new BDC regulatory structure outlined in the “Regulatory and Supervisory Guidelines for Bureau De Change Operations in Nigeria, 2024.”
These concerted efforts by the CBN, including the FX Code’s emphasis on accountability and the support measures for BDCs, appear to be contributing to the Naira’s recent strengthening. The central bank’s commitment to ongoing reforms and interventions will be critical in maintaining this positive trajectory and fostering long-term stability in the foreign exchange market.
