Naira Appreciated by N45 Against The Dollar – What’s Driving the Gain?

Hold up! The naira just made a solid move in the black market, gaining N45 against the dollar from February 3, 2025, to February 7, 2025, from N1,610/$1 to a jaw-dropping N1,565/$1. If you’re wondering what’s going on, you’re not alone. With the way exchange rates have been moving, it sometimes feels like the naira is playing a game of hide and seek. But this time, there’s a solid reason behind the shift. Let’s break it down.

What’s Driving the Gain?

The recent gain of the naira can be attributed directly to the Central Bank of Nigeria’s (CBN) tireless efforts in implementing economic reforms which include;

• Implementation of the Newly Introduced FX Code: The CBN has introduced a new Foreign Exchange (FX) Code, and it’s a game-changer. Think of it as a rulebook that brings more order, transparency, and accountability to Nigeria’s forex market. With fewer shady dealings and more structured transactions, the naira is finally getting some breathing room.

  
  

• Extension of FX Sales to Authorized Bureau de Change Operators: The CBN isn’t stopping at the FX Codes—it’s doubling down by expanding forex sales to authorized Bureau de Change (BDC) operators. And trust us, this is a big deal! With more dollars flowing through official channels, BDCs can offer better rates, reducing the influence of unlicensed operators. This move injects more dollars into the market, reducing pressure and giving the naira a much-needed boost.

• Enhanced Supply of Foreign Currency: A big part of the naira’s struggle has always been demand outweighing supply. By ensuring that foreign exchange is more readily available, the CBN helps stabilize the demand for the naira against the dollar. A robust supply has significantly reduced the wild fluctuations we’ve seen in the past, people don’t have to scramble for dollars at ridiculous rates.

   

• Market Confidence Restoration: At the heart of all these reforms is the CBN’s effort to restore market confidence. When regulations are clear and consistent, traders and investors feel more secure. As confidence rises, so does the demand for the naira in the black market—leading to its recent appreciation. Additionally, a stable and predictable forex market is good news for everyone—businesses, importers, and even that vacation plan you’ve been eyeing.

Bigger picture:

The recent gains of the naira against the dollar in the black market are not just statistical victories; they reflect a broader narrative of recovery and resilience. A stronger naira means better purchasing power, more stability for businesses, and less pressure on the average Nigerian.

As the CBN advances its economic reforms, the naira’s recent gains signal progress in the right direction. These strategic moves are paving the way for a more stable and resilient forex market. For businesses and individuals alike, staying informed and adaptable will be key in navigating the evolving financial landscape. With continued efforts, the future of the naira looks promising—let’s keep an eye on what’s ahead!