The Nigerian naira has reached its strongest level in the unofficial market this year, trading at N1,520 to the US dollar in the early hours of Tuesday.
This significant improvement is attributed to enhanced market fundamentals and ongoing reforms by the Central Bank of Nigeria (CBN).
The naira’s buying price in the black market has breached the N1,500/$ support line, thanks to the CBN’s FX sale to BDC operators and decreased FX demand.
The Nigerian currency has experienced a rare period of stability, one year after its value plummeted by 70% against the US dollar following the relaxation of foreign exchange controls in 2023.
However, the CBN has implemented various forex interventions and policy measures to boost the naira’s value, including stricter rules for Bureau De Change operators and increased dollar liquidity in the official market.
CBN Governor Dr. Olayemi Cardoso has warned of harsh consequences for any violations of the newly introduced Nigeria Foreign Exchange (FX) Code, reaffirming the Central Bank’s commitment to upholding ethical behavior and transparency in Nigeria’s foreign exchange market.
The improved market fundamentals have also led to increased participation in the Nigerian stock market, despite a decline in Treasury bill yields and increased incentives for naira-denominated investments.
Meanwhile, the US Dollar Index has traded above 108 index points, driven by conflicting economic data and new tariff concerns.
The index increased by 0.21% to 108.31, as market players await direction on future interest rate policy from Federal Reserve Chair Jerome Powell’s testimony before Congress.
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