The Naira has strengthened to N1,640 per dollar in the parallel market, up from N1,655 per dollar on Monday.
Data from the Central Bank of Nigeria (CBN) shows that the exchange rate in the Nigerian Foreign Exchange Market (NFEM) decreased to N1,526.3 per dollar, down from N1,533.5 per dollar on Monday, reflecting a N7.2 appreciation for the naira.
As a result, the gap between the parallel market rate and the NFEM rate narrowed to N113.7 per dollar from N121.5 per dollar on Monday.
Similarly, the Naira also strengthened to N1,526.3 per dollar in the official foreign exchange market.
This improvement follows a challenging period 18 months ago, and recent stability in the naira since December has provided some optimism, with the exchange rate holding within a narrow range of about N1,550 to N1,520 per dollar.
Analysts attribute this stability, which has lasted nearly two months, to the ongoing reforms by the CBN, including the introduction of the Electronics Foreign Exchange Matching System (EFEMS) last December and the upcoming FX code set to launch by the end of January.
Taiwo Oyedele, chairman of Nigeria’s Fiscal Policy and Tax, noted that the new FX code would improve transparency and reduce market pressure, with about $20 million being taken off the market daily.
CBN Governor Olayemi Cardoso explained that the exchange-rate reforms, which have made the naira more competitive, offer a potential opportunity for investors.
He pointed out that the recent depreciation of the currency presents an attractive chance for investors to capitalize on a more competitive naira.
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