The Nigerian naira exhibited strength in the foreign exchange market, reaching N1,440 per dollar on Friday, marking an improvement from Thursday’s rate of N1,450 per dollar.
The Nigerian Foreign Exchange Market also witnessed appreciation, with the indicative exchange rate falling to N1,435.53 per dollar from N1,461.9 per dollar on Thursday, reflecting a significant N26.37 appreciation for the national currency.
This positive development led to a reduction in the gap between the official and parallel market exchange rates, decreasing from N11.9 per dollar on Thursday to N4.47 per dollar on Friday.
The momentum follows the Central Bank of Nigeria’s (CBN) recent announcement on Wednesday, imposing limits on banks’ foreign currency holdings and expressing concerns about the surge in forex exposures on their balance sheets, particularly following the local currency’s depreciation against the U.S. dollar.
In response to the evolving economic landscape, the CBN issued a new circular on January 31, 2024 (TED/FEM/FPC/GEN/001/003), introducing significant changes to the regulations governing exchange rate quotes by International Money Transfer Operators (IMTOs). Previously, IMTOs were confined to quoting rates within a specified limit of -2.5 percent to +2.5 percent around the previous day’s closing rate of the Nigerian foreign exchange market, as per the circular dated September 13, 2023 (TED/FEM/PUB/FPC/001/009).
Aligning with the CBN’s commitment to liberalise the Nigerian foreign exchange market, the new circular empowers IMTOs to quote exchange rates for naira payout to beneficiaries based on prevailing market rates at the Nigerian foreign exchange market. This is to be conducted on a willing seller, willing buyer basis.
The circular, signed by Hassan Mahmud, Director of the Trade and Exchange Department, supersedes the previous circular issued on September 13, 2023 (TED/FEM/PUB/FPC/001/009).
“All Authorised dealers, International Money Transfer Operators, and the general public are advised to take note of this development and ensure compliance with the revised regulations. The CBN’s decision reflects ongoing efforts to adapt and enhance the dynamics of the Nigerian foreign exchange market,” stated the circular.
