Emmanuel Ochayi
The dollar has fallen sharply against the naira in the last two days after the Central Bank of Nigeria (CBN) introduced a new Foreign Exchange (FX) Code. The FX Code aims to improve liquidity and transparency in Nigeria’s foreign exchange market.
According to the FMDQ Securities Exchange, the dollar was quoted at N1,510.72 on Wednesday, down from N1,533.63 on Monday before the launch of the FX Code. This represents a gain of N22.91 or 1.5% for the naira.
Join our WhatsApp Channel“The naira appreciated by N20.48 compared to Friday’s rate of N1,531.20. In three trading days, it recorded a 1.35% gain in the Nigerian Foreign Exchange Market (NFEM),” the report stated.
Dollar to Naira Exchange Rate Strengthens
On a daily basis, the naira also improved against the dollar. Data from the FMDQ showed that the naira closed at N1,522.68 on Tuesday before strengthening further to N1,510.72 on Wednesday, representing a 0.79% gain.
In the parallel market, the dollar also dropped. The naira traded at N1,625 on Wednesday, up from N1,634 on Tuesday.
“The naira gained N9 in one day, showing a 0.55% appreciation against the dollar,” a currency trader in Lagos confirmed.
CBN’s FX Code and Its Impact
The CBN introduced the FX Code to regulate market activities and improve the foreign exchange system.
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“This FX Code represents a set of principles that align with global best practices,” a CBN official said. “It is designed to guide market participants and improve transparency in Nigeria’s foreign exchange market.”
Market analysts say the new FX Code is already showing signs of stabilizing the exchange rate. “Since the introduction of the FX Code, we have seen increased confidence in the market,” an economist noted. “The naira’s appreciation against the dollar in both the official and black markets is a positive sign.”
Nigeria’s External Reserves Drop
Despite the improvement in the naira’s value, Nigeria’s external reserves have declined. Data from the CBN showed that external reserves dropped by $1.13 billion since the start of the year, standing at $39.79 billion as of January 28, 2025.
“The reserves were $40.92 billion on January 6, 2025, but have since decreased,” the report indicated.
Future Outlook for the Dollar and Naira
Currency traders and analysts are watching closely to see if the naira can maintain its gains.
“If the FX Code continues to bring stability, we may see further appreciation of the naira against the dollar,” a forex analyst predicted. “However, external factors such as oil prices and foreign investments will also play a role.”
With the CBN’s new policy in place, market participants will monitor how the dollar and naira react in the coming weeks.
