The naira’s strong performance has continued as the local currency appreciated again to close at N1514/$1 at the parallel market on Wednesday, February 19, 2025.
This represents an N11 or 0.72% gain when compared to the N1525/$1 that was recorded on Tuesday, February 18, 2025, as the sustained implementation of the Central Bank of Nigeria (CBN) forex policy by banks and Bureau De Change (BDC) operators impacts the market.
Local currency remains stable at the official market
Available data from the CBN shows that the naira remained stable at the official market EFEM market to close at N1,510/$1 on Wednesday, February 19, 2025. This was the same rate that was recorded on Tuesday, February 18, 2025
- Intra-day high and low for the day were N1,513 and N1,507, respectively, while the weighted average rate was N1,510.parallel
With the contrasting performance of the naira in both markets, the gap between the official rate and the black market seems to have dropped further to just N4.
Non-renewal of US dollar swap by CBN
The strengthening of the naira in the parallel market has been linked to the resilient and transformative leadership strategy of the CBN, the non-renewal of banks’ US dollar swap, and the increasing number of participating banks in the sales of interbank proceeds to BDCs.
- This was made known by the President Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, during a chat with Nairametrics, where he congratulated the CBN and the fiscal authorities for this achievement.
- He said that the BDC operators have so far demonstrated their effective and potent transmission mechanism of the CBN policies.
Gwadebe said, ‘’The naira appreciation is phenomenal and exciting, and we, the Association of Bureaux de change operators of Nigeria and our members, heartily congratulate the apex bank and the fiscal authorities on this great achievement.
‘’This development is linked to the resilient and transformative leadership strategy of the apex bank, non-renewal of Banks USD swap with the apex bank, and the increasing number of participating banks in the sales of interbank proceeds to BDCs.
‘’The BDCs have so far demonstrated their effective and potent transmission mechanism of the Central Bank Foreign Exchange policies.
‘’Finally, we are assuring the CBN Governor on our commitment to his vision of Diversity in collaboration as this has enhanced market transparency, investors’ confidence, release of timely information, accretion of Buffers and positive market perception.’’
Going further, the ABCON boss said the CBN has been unable to renew dollar swaps with banks, and so leaves the banks with huge forex liquidity.
He said, ‘’The banks do dollar swap with the apex banks in terms of deposit, and the CBN did not renew such transactions for banks dollar swap and therefore leave the banks with huge dollar liquidity.’’
What you should know
Recall that in December 2024, the CBN revised its guidelines, permitting licensed BDCs to purchase foreign exchange directly from Authorized Dealers as part of efforts to curb market volatility and reduce the widening gap between the official and parallel markets.
- This decision, outlined in the CBN circular titled “Revised Guidelines for the Nigeria Foreign Exchange Market (NFEM),” marks a pivotal shift in the regulatory landscape for BDCs.
- However, the BDCs highlighted the significant challenges they faced with complaints about the reluctance of the banks to follow through with its implementation and then appealed for its extension by the CBN. It said that the attitude of the banks affected the takeoff of the policy, which was expected to end on January 31, 2025.
- In response to the pleas of the BDC operators, the CBN extended the deadline for the weekly forex purchases to May 30, 2025.
The apex bank in February extended the deadline for BDC operators to access the Nigerian Foreign Exchange Market (NFEM) for weekly FX purchases from January 1, 2025, to May 30, 2025.
