Market News

BY Hope Moses-Ashike

The naira sustained its appreciation across segments of the foreign exchange (FX) market during the week, as holders of the US dollar continued to offload their positions amid declining rates, leaving many nursing losses.

A street trader told BusinessDay that several operators who had stocked up on dollars at higher rates are now selling at a loss as the greenback weakens across both official and parallel markets. “Some of us bought when the rate was very high. Now that it is dropping, we are losing money,” he said, reflecting the growing pressure on speculative dollar demand.

By the end of the week, the naira closed stronger in the parallel market, popularly known as the black market, at N1,340 per dollar, compared to N1,346.32 per dollar at the official window.

At the Nigerian Foreign Exchange Market (NFEM), data from the Central Bank of Nigeria (CBN) showed that the naira appreciated by N9.10 week-on-week, representing a gain of 0.7 percent from N1,355.42 quoted the previous Friday to N1,346.32 at the close of trading on Friday.

On a five-day trading basis, the local currency was largely flat, gaining 0.1 percent or N1.46 from N1,347.78 quoted on Monday at the NFEM. However, on a day-on-day basis, the naira depreciated slightly by N4.97 or 0.4 percent, weakening from N1,341.35 on Thursday to N1,346.32 on Friday.

In the parallel market, the currency recorded sharper gains. The naira appreciated by N80 to close at N1,340 on Friday, a gain of 5.97 percent from N1,420 quoted the previous Friday. On a daily basis, it gained N5 from N1,345 on Thursday. Over the five-day trading period, it strengthened by N40 or 2.98 percent from N1,380 quoted on Monday.

The gap between the official and parallel market rates widened slightly to N6, representing 0.29 percent, compared with N4 or 0.29 percent recorded on Thursday.

Notably, the naira had posted its strongest convergence level in two years on Thursday, when the spread between the official and parallel markets narrowed to 0.29 percent. This followed a rally that pushed the local currency to a three-year high of N1,345 per dollar in the black market.

Supporting sentiment around the currency, Nigeria’s external reserves continued their upward trajectory, climbing to 48.50 billion dollars as of February 17, 2026, according to data from the apex bank. The accretion in reserves is seen as strengthening the Central Bank’s capacity to intervene in the market when necessary.

Taiwo Ebenezer, South-West chairman of the Association of Bureaux De Change Operators of Nigeria, said the recent appreciation followed the announcement that bureaux de change (BDCs) would resume participation in the NFEM window as directed by the Central Bank.

Despite the renewed optimism, BDC operators have yet to begin dollar purchases from commercial banks, one week after the official reopening of the window to them.

“We are hopeful that trading will commence next week. The modalities are being finalised,” a BDC operator said, adding that improved access to official supply could help the naira appreciate further and narrow the gap between the official and parallel markets.

The Central Bank recently restored access for licensed BDCs to the official foreign exchange market, a move designed to enhance dollar liquidity in the retail segment and ease persistent pressure in the parallel market.

In a circular dated February 10, the CBN stated that all duly licensed BDCs are permitted to purchase foreign exchange from the NFEM through any authorised dealer bank at prevailing market rates.

Earlier, in September 2025, the apex bank confirmed that 82 BDC operators had been fully licensed to commence operations from November 27 under its revised regulatory framework for Nigeria’s foreign exchange market.

Under the framework, authorised dealer banks are required to conduct comprehensive know-your-customer checks and due diligence on their BDC clients in line with regulatory standards and internal risk management procedures. Upon satisfactory completion, banks may sell foreign currency to BDCs for eligible retail transactions, subject to a weekly cap of $150,000 per bureau.

The Central Bank said the measure is intended to ensure adequate foreign exchange supply for legitimate end-user needs, particularly retail transactions, amid past volatility in the naira and widening spreads between official and informal market rates.

The guidelines also impose strict utilisation controls. Any foreign exchange purchased but not deployed must be resold into the market within 24 hours, as BDCs are prohibited from holding open positions in funds sourced from the official window. Licensed operators must submit timely and accurate transaction returns electronically to the regulator.

All settlements are to be conducted strictly through accounts with licensed financial institutions. Third-party settlements are barred, while cash transactions are capped at 25 percent of each deal, reinforcing efforts to limit cash-based foreign exchange activity and enhance transparency.

The rules, which take immediate effect, were signed by Musa Narkoji, CVB’s director of the Trade and Exchange Department.

The policy shift marks a significant recalibration of the Central Bank’s foreign exchange strategy, formally reintegrating BDCs into the market after years of restrictions, as policymakers seek to stabilise the naira, improve price discovery, and rebuild confidence across Nigeria’s fragmented FX system.