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Naira gains in black market as demand moves to NFEM - BUSINESSDAY
The naira appreciated in the black market on Wednesday but depreciated in the official market as demand for dollars moved to the Nigerian Foreign Exchange Market (NFEM).
After trading, the naira gained 0.6% to close at N1,560 per dollar, a N10 increase from N1,570/$ on Tuesday in the black market, also known as the parallel market.
In the same market, the naira gained N5 against pounds, closing at N2,020/pound on Wednesday from N2,025 the previous day. The local currency appreciated against the euro, gaining N10 to close at N1,690 on Wednesday as against N1,700 on Tuesday in the black market. However, the Canadian dollar and Chinese yuan closed steady at N1,150 and N215, respectively in the parallel market.
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At the official FX market, Naira depreciated by N5.23 or 0.3% as the dollar was quoted at N1,537.62 as against the previous close of N1,532.39 at NFEM.
Bala Bello, a member of the Monetary Policy Committee (MPC), said a substantial portion of FX demand had migrated to the official window, thus reducing speculative demand and allowing market forces to play a more significant role in exchange rate determination. As confidence in the revised framework grows, the positive implications for domestic price stability are expected to gradually unfold.
Against the backdrop of tight liquidity management and the recent modification of the foreign exchange management strategy, the naira exchange rate has demonstrated relative stability, with considerable appreciation, he said. The revised FX management strategy, which includes the adoption of the Electronic Foreign Exchange Matching System (EFEMS) and the Nigeria Foreign Exchange Code, to enhance transparency, ethics and credibility in the market, is gradually yielding desired outcomes.
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In his personal statement at the last MPC meeting in February 2025, Aloysius Uche Ordu, MPC member, said the naira appreciated by 13.6% against the US dollar between November 2024 and January 2025, reflecting improved foreign exchange inflows and effective monetary policies. The appreciation, he said, is attributed to higher oil revenue, increased remittances, and foreign investment inflows, as well as enhanced exchange rate management by CBN.
According to him, the foreign exchange market has stabilised, providing greater confidence for businesses and consumers, reducing import costs, and supporting domestic price stability. Additionally, Nigeria’s external reserves remained robust, supporting exchange rate stability and investor confidence.
CBN’s continued efforts to increase reserves through non-oil exports, diaspora remittances, and foreign investment inflows have contributed to this positive trend. As a result, the economy is better positioned to withstand external shocks, ensuring a more resilient financial environment for businesses and consumers, stabilising oil prices and increasing global demand for Nigerian crude have helped sustain foreign exchange inflows and support economic growth projections for 2025.
