GOOD NEWS: Naira Appreciates Against US Dollar In Black Market; SEE New Exchange Rate
The Nigerian naira experienced an appreciation against the United States dollar in the parallel foreign exchange market, concluding Monday’ s trading session on a stronger note. This development signals a positive shift in the value of the local currency relative to the dollar, indicating increased demand for the naira or a reduced demand for the dollar in the black market.
According to a Bureau de Change (BDC) operator based in Wuse Zone 4, Abuja, Abubakar Alhasan, the naira traded at N1, 600 per dollar on Tuesday. This marks an improvement from the previous day’ s exchange rate, where the naira was exchanged at N1, 610 per dollar. The difference of N10 per dollar signifies that the naira strengthened against the US dollar within a 24- hour period in the black market. This trend suggests a slight recovery for the naira, which has faced significant fluctuations in recent months due to various economic factors, including foreign exchange policies, inflation, and market speculation.
In the official foreign exchange (FX) market, the naira also demonstrated a marginal appreciation. On Tuesday, the official exchange rate closed at N1, 498. 95 per dollar, compared to the N1, 495. 60 rate recorded on Monday. Although the difference is relatively small, the movement reflects a strengthening trend for the naira in the regulated market as well. The exchange rate in the official market is determined by the policies of the Central Bank of Nigeria (CBN), foreign reserves, and market liquidity. Any improvement, no matter how slight, is often regarded as a sign of increasing confidence in the local currency.
The recent appreciation of the naira comes amid ongoing efforts by the Central Bank of Nigeria to stabilize the foreign exchange market. On Monday, the apex bank announced the extension of FX sales to Bureau de Change operators until the end of May 2025. This move is part of broader measures aimed at improving liquidity in the foreign exchange market, reducing pressure on the naira, and curbing excessive volatility. By allowing BDC operators to access foreign exchange for an extended period, the CBN aims to ensure a more stable and predictable FX market, which can, in turn, help moderate the fluctuations in exchange rates.
The foreign exchange market in Nigeria is largely influenced by supply and demand dynamics. The parallel or black market operates outside the official regulatory framework, often responding more quickly to changes in market conditions, economic policies, and external factors. The appreciation of the naira in this segment may be attributed to a combination of factors, including increased dollar inflows, reduced speculative activities, or interventions by financial regulators to enhance market stability.
Despite the recent gains recorded by the naira, concerns remain over the long-term sustainability of its value. Economic experts emphasize the need for structural reforms, increased foreign investment, and improved production capacity to strengthen the currency further. While temporary fluctuations in exchange rates occur frequently, a stable and sustainable appreciation of the naira would require comprehensive measures addressing underlying economic challenges.
Overall, the strengthening of the naira against the dollar in both the black market and the official FX market reflects a positive development for Nigeria’ s economy. The Central Bank of Nigeria’ s decision to extend FX sales to BDC operators is likely to provide additional liquidity, easing foreign exchange pressures. However, continued efforts to enhance economic stability, boost investor confidence, and ensure a balanced foreign exchange policy will be essential in maintaining a favorable exchange rate for the naira in the long run.
