Naira appreciates to N1514/$1 in parallel market as CBN leaves banks with huge dollar liquidity

This represents an N11 or 0.72% gain when compared to the N1525/$1 that was recorded on Tuesday, February 18, 2025, as the sustained implementation of the Central Bank of Nigeria (CBN) forex policy by banks and Bureau De Change (BDC) operators impacts the market.

Available data from the CBN shows that the naira remained stable at the official market EFEM market to close at N1,510/$1 on Wednesday, February 19, 2025. This was the same rate that was recorded on Tuesday, February 18, 2025

With the contrasting performance of the naira in both markets, the gap between the official rate and the black market seems to have dropped further to just N4.

The strengthening of the naira in the parallel market has been linked to the resilient and transformative leadership strategy of the CBN, the non-renewal of banks’ US dollar swap, and the increasing number of participating banks in the sales of interbank proceeds to BDCs.

Gwadebe said, ‘’The naira appreciation is phenomenal and exciting, and we, the Association of Bureaux de change operators of Nigeria and our members, heartily congratulate the apex bank and the fiscal authorities on this great achievement.

‘’This development is linked to the resilient and transformative leadership strategy of the apex bank, non-renewal of Banks USD swap with the apex bank, and the increasing number of participating banks in the sales of interbank proceeds to BDCs.

‘’The BDCs have so far demonstrated their effective and potent transmission mechanism of the Central Bank Foreign Exchange policies.

‘’Finally, we are assuring the CBN Governor on our commitment to his vision of Diversity in collaboration as this has enhanced market transparency, investors’ confidence, release of timely information, accretion of Buffers and positive market perception.’’

Going further, the ABCON boss said the CBN has been unable to renew dollar swaps with banks, and so leaves the banks with huge forex liquidity.

He said, ‘’The banks do dollar swap with the apex banks in terms of deposit, and the CBN did not renew such transactions for banks dollar swap and therefore leave the banks with huge dollar liquidity.’’

Recall that in December 2024, the CBN revised its guidelines, permitting licensed BDCs to purchase foreign exchange directly from Authorized Dealers as part of efforts to curb market volatility and reduce the widening gap between the official and parallel markets.

The apex bank in February extended the deadline for BDC operators to access the Nigerian Foreign Exchange Market (NFEM) for weekly FX purchases from January 1, 2025, to May 30, 2025.