The Naira has strengthened on the official market to N1,560.57 against the dollar, driven by foreign exchange reforms. The summary of FX trading on Tuesday showed a 0.79 percent appreciation of the Naira, with the dollar quoted at N1,560.57 compared to N1,572.86 on Monday.
This improvement comes amidst indications that the benchmark interest rate may be further raised during the upcoming Monetary Policy Committee meeting. The Governor of the Central Bank of Nigeria, Dr. Olayemi Cardoso, advocated for the highest increase in rates at the last meeting.
The Naira has gained 4.28 percent against the dollar compared to its lowest value of N1,627.40 on March 8, 2024. The daily foreign exchange market turnover was $195.13 million on Tuesday.
At the parallel market, the Naira strengthened to 1,570 per dollar from 1,590 on Monday. Analysts anticipate further stabilization of the Naira this week following recent policy measures introduced by the Central Bank of Nigeria.
These reforms include unifying the foreign exchange market, promoting a willing buyer-willing seller market, removing limits on margins for International Money Transfer Operator remittances, introducing a two-way quote system, and implementing broad reforms in the Bureau De Change segment.
Dr. Cardoso emphasized the potential of these measures to attract capital inflows and enhance liquidity in the foreign exchange market.
Data from the Central Bank shows a 3.62 percent increase in foreign currency reserves to $34.37 billion as of March 12, 2024, from $33.17 billion recorded at the beginning of February 2024.
The recent announcement by the CBN also indicates a significant increase in Diaspora remittances, rising by 433 percent to $1.3 billion in February compared to $300 million in January.
The Monetary Policy Committee meeting in February raised the Monetary Policy Rate by 400 basis points to 22.75 percent, adjusted the asymmetric corridor, raised the Cash Reserve Ratio, and retained the Liquidity Ratio to address inflation and stabilize the exchange rate.