Naira Appreciates to N1,595/$ in Official FX Market, Surpassing Parallel Market Rates

The Nigerian naira witnessed a positive shift, reaching N1,595.11 per dollar in the official Nigerian Foreign Exchange Market (NAFEM) on Wednesday. This represents a significant appreciation from N1,609.51 per dollar recorded the previous day.

Contrastingly, the parallel market saw the naira appreciate to N1,490 per dollar, up from N1,610 per dollar on Wednesday. This reversal resulted in a reduced gap between the official and parallel market exchange rates, narrowing to N135.11 per dollar, compared to 49 kobo per dollar a day earlier.

Data from the Financial Markets Dealers’ Quotations (FMDQ) revealed the indicative exchange rate for NAFEM, signaling a noteworthy N14.4 appreciation for the naira.

This shift comes on the heels of recent foreign exchange guidelines issued by the Central Bank of Nigeria (CBN), aiming to address market distortions. The CBN had implemented measures such as a 400 basis points increase in the Monetary Policy Rate, bringing it to 22.75 percent, and adjustments to the Cash Reserve Ratio and the asymmetric corridor surrounding the MPR.

Olayemi Cardoso, the governor of the CBN, emphasized that the naira’s undervaluation is primarily attributed to distortions in the foreign exchange market. He assured that corrective actions would be taken to eliminate these distortions and deter potential offenders.