Naira Appreciates by N137 in a Week Due to New CBN Forex Platform

The naira experienced a notable appreciation of N137.69 against the U.S. dollar in one week, following the Central Bank of Nigeria's introduction of a new foreign exchange platform.

Exchange Rate Movement

As of Friday, December 6, 2024, the naira closed at N1,535/$ on the official market, compared to N1,672.69/$ on November 29, representing an 8.24% gain. Throughout the week, the naira steadily strengthened, with rates improving daily:

Monday, Dec. 2: Closed at N1,660/$

Tuesday, Dec. 3: Closed at N1,625/$

Wednesday, Dec. 4: Closed at N1,608/$

Thursday, Dec. 5: Closed at N1,567/$

Factors Behind the Appreciation

1. New FX Platform: The Bloomberg BMatch system, launched on December 2, 2024, introduced automated trade-matching for transparency and efficiency in the FX market.

2. Eurobond Offering: Nigeria raised $2.02bn through oversubscribed Eurobonds, boosting dollar liquidity.

3. Improved Reserves: Nigeria's reserves reached $40bn, enhancing the CBN's ability to stabilize the naira.

4. Higher Liquidity: Increased foreign exchange inflows and diaspora remittances during the festive season supported the naira's strength.

Reactions and Recommendations

Experts and stakeholders have praised the naira's recovery. Dr. Muda Yusuf, an economist, emphasized the importance of sustaining this trend by improving fiscal policies, controlling government spending, and fostering non-oil exports. Similarly, Adeyemi Oyerinde of NECA highlighted the need for refining domestic crude oil and increasing patronage of Nigerian goods to reduce dollar outflows.

The stronger naira has eased forex challenges for businesses and reduced inflationary pressures. However, sustaining this progress will require consistent policy implementation and fiscal discipline.

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