The unofficial market sees the Naira hover around the N1,500/$ level.
As market confidence in Nigeria’s capital market continues to strengthen, the Nigerian naira earned respectable gains against the US dollar on the parallel foreign exchange market during the midweek trading session.
The naira gained N5 in a single day as currency traders traded it at an average rate of N1,515 on Wednesday, up from N1,520/$ on Monday.
The CBN’s continuous changes are partly to blame for the shifting dynamics in Nigeria’s foreign exchange market.One of the significant policy adjustments attributed to the naira’s recovery was the implementation of the Electronic Foreign Exchange Matching System (BMatch) in December 2024.
Through the use of Bloomberg’s BMatch system, this CBN-backed tool enables approved dealers to anonymously submit orders into a central limit order book, ensuring greater transparency and efficient price discovery in the FX market.
By lessening market distortions and giving the CBN improved oversight, the system has stabilized fluctuations in exchange rates.
As a result, the CBN’s January 2025 introduction of the Nigeria Foreign Exchange Code increased market stability even more. The monetary rule established standards for moral conduct, management, execution, information sharing, risk control, and settlement processes in the foreign exchange market. These reforms, which align Nigeria’s foreign exchange market with global best practices, have boosted investor confidence.
Despite Trump’s threat of tariffs, the US dollar continues to hold its safe haven credentials.
Amid the latest round of U.S. elections, market anxiety grew, and safe-haven currencies like the dollar and yen rose on Wednesday. Key motivators included tough negotiations over the dispute between Russia and Ukraine and tariff threats made by U.S. President Donald Trump.
The minutes from the most recent Federal Reserve policy meeting revealed that Trump’s initial policy suggestions aroused fears about increased inflation, forcing the dollar to slide further against the yen.
The minutes also indicated that rate cuts had been held for a long time. All things considered, the value of the dollar rose in comparison to other currencies, such as the euro and pound, which investors typically buy when they have a high risk tolerance.
These advances were fueled by Trump’s comments late Tuesday, when he declared his intention to put auto tariffs “in the neighborhood of 25 percent” and equivalent charges on imports of pharmaceuticals and semiconductors. The day after cabinet members are supposed to provide him reports outlining their options for different import levies, Trump said on Friday that the car charges would be enacted as early as April 2.
Following a 1.2 percent decline the week before, the dollar index increased by 20 basis points to 107 points last week.
The pound was momentarily strengthened by higher-than-expected UK inflation, which jumped to a 10-month high of 3% in January and is predicted to continue rising. Sterling hit a two-month high overnight, despite its most recent trading price of $1.2585.
The Trump administration said Tuesday that it has agreed to continue negotiations with Russia on resolving the war in Ukraine, following an initial meeting that did not include Kyiv. Washington’s prior approach, which mobilized American allies to isolate Russian President Vladimir Putin, changed with this.
On Wednesday, Trump retaliated against Volodymyr Zelensky, the president of Ukraine. In response to Trump’s implication that Ukraine was responsible for Russia’s full-scale invasion in 2022, Zelensky said the president had been duped by Russian disinformation. Zelensky was denounced by Trump as “a dictator without elections,” and he was cautioned that he must move swiftly to establish peace or risk losing his country.
