The Nigerian naira appreciated to N1,635 per dollar in the parallel market on Tuesday, strengthening from N1,650 per dollar recorded on Tuesday.
This marks a N15 gain against the greenback as market forces drive slight improvements in foreign exchange rates.
According to data from the Central Bank of Nigeria (CBN), the official exchange rate closed at N1,533.50/$1 on Monday, reflecting relative stability in the market.
This is coming a day after the CBN launched the Nigeria Foreign Exchange (FX) Code.
Based on Nairametrics research team’s data, here is an analysis of the changes in parallel market rates for the US Dollar (USD), British Pound (GBP), and Euro (EUR) from January 28 to January 29, 2025:
US Dollar (USD):
- On January 28, 2025, the parallel market rate for USD stood at N1,650, which saw a 0.61% increase from the previous day.
- On January 29, 2025, the USD rate decreased slightly to N1,635, reflecting a 0.92% drop.
- This fluctuation indicates some volatility in the dollar market, which may be attributed to varying demand-supply dynamics or changes in forex liquidity during the two days.
British Pound (GBP)
- The GBP rate on January 28, 2025, was N2,025, with no change observed (0.00%) from the previous day.
- On January 29, 2025, the GBP rate increased slightly to N2,030, reflecting a -0.25% change in the opposite direction.
- This suggests a relatively stable market for the GBP compared to the USD, with only minor daily fluctuations, likely due to adjustments in demand.
Euro (EUR):
- On January 28, 2025, the parallel rate for the Euro was N1,695, with a -0.29% decrease compared to the previous day.
- However, on January 29, 2025, the Euro rate appreciated to N1,670, showing a 1.50% increase from the previous day.
- This sharp rise in the Euro rate could signal a change in forex market dynamics, possibly driven by market sentiment or shifts in external economic conditions.
Data from the CBN website reveals that on Tuesday the currency traded N1526.3599/$1 (buying) and N1527.3599/$1 (selling).
Market analysts attribute the naira’s recent appreciation to increased forex inflows from remittances and improved liquidity within the banking system.
Some traders also speculate that the CBN’s recent intervention measures, including the sale of forex to Bureau de Change (BDC) operators, have contributed to easing pressure on the naira.
Outlook for the Naira
While the naira has gained slightly, forex market volatility remains a key concern, with traders keeping a close watch on policy adjustments from the CBN.
Economic factors such as oil revenue inflows, external reserves, and inflation trends will play a crucial role in determining the direction of the naira in the coming weeks.
Investors and businesses are advised to stay informed about the evolving forex landscape as the CBN continues its efforts to stabilize the exchange rate.
More insights
The Central Bank of Nigeria (CBN) launched the Nigeria Foreign Exchange (FX) Code in Abuja on Tuesday, aimed at promoting professionalism and ethical practices within the FX market.
- As part of its ongoing FX market reforms, the CBN introduced the Electronic Foreign Exchange Matching System (EFEMS) in December 2024, a move that has already yielded significant results.
- Several Bureau de Change (BDC) operators in Nigeria have expressed optimism about the Naira’s prospects in 2025, with many forecasting a stronger currency, driven by anticipated reforms in the country’s forex market.
In May 2024, the CBN introduced a recapitalization policy, which required Tier-1 BDC operators to increase their minimum capital requirement to ₦2 billion, while Tier-2 operators were mandated to meet a threshold of ₦500 million. This policy, according to the CBN, was designed to strengthen the financial health of the sector, curb illegal forex trading, and align the industry with international best practices.
