The naira, Nigeria’s currency, continued its upward trend against the dollar on Monday, with significant appreciation observed in both the official and parallel markets. The Bureaux de Change (BDC) exchange rate saw a remarkable 12 percent reduction or N152.23, settling at N1,117.5 per dollar.
This surge in the naira’s value over recent weeks has been attributed to the federal government’s intensified efforts to stimulate the economy. Several factors have contributed to this positive trajectory:
Central Bank’s Dollar Sales to BDCs: In response to market dynamics, the Central Bank of Nigeria (CBN) announced its plan to sell dollars to Bureau de Change (BDC) operators. Detailed in a circular on its website, each BDC received an allocation of $10,000 at approximately N1101 per dollar. The CBN instructed the BDCs to maintain a spread not exceeding 1.5 percent above the CBN rate. This injection of dollars into the market strengthened the naira’s position against the dollar, resulting in the exchange rate of N1,117.5 per dollar. Prospective buyers are adopting a wait-and-see approach in anticipation of further rate adjustments.
Implementation of CBN Policies: Nnamdi Nwizu, co-founder of Comercio Partners Limited, an investment bank, emphasized the pivotal role of the CBN’s policy initiatives led by Dr. Olayemi Cardoso in driving the naira’s appreciation. These strategies have restored confidence in the market, attracting Foreign Portfolio Investment (FPI) into Nigeria and resolving the forex backlog. Additionally, elevated interest rates have increased the difficulty of sourcing naira for dollar transactions, thereby strengthening the naira’s resilience.
