Naira on Gain Streak, Hits New High Against USD amid CBN Warning to Banks Over FX Code Violations
- The naira continued its rally against the US dollar, gaining further in the official and black market windows
- On Wednesday, January 29, 2025, the naira gained N11 and N10 in both segments of the foreign exchange windows
- The currency closed trading at N1,511.72 in the official market from N1,522 per dollar and N1,640 from N1,650 in the parallel window
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The naira has been recovering since the Central Bank of Nigeria (CBN) implemented several reforms.
The apex bank launched a new FX Code to boost liquidity and transparency, warning banks and traders of dire consequences if they violate it.
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CBN’s new policy propping up naira’s value
Analysts believe the new Code has paid off following the gains of the naira in the official and parallel market windows.
On Wednesday, January 29, 2025, the naira made its biggest gain in weeks against the dollar in the official market.
The local currency opened trading positively at N1,514 per dollar, representing a 1.27% gain, and closed at N1,510.72, an appreciation of 0.17% in the Nigerian Foreign Exchange Market (NFEM).
The new rate differs from the N1,522 per dollar that the naira closed on Tuesday, January 28, 2025.
Gap between official, black markets narrows
Currency dealers quoted the dollar at a high of N1,514 per dollar and a low of N1,504.
Similarly, the naira traded high in the parallel segment of the foreign exchange market, closing at N1,640 per dollar, up from N1,650 the previous day.
However, the gap between the official and parallel markets narrowed from N137 to N129 on Wednesday, January 29, 2024.
“We are seeing the effect of the robust policy by the CBN, which is paying off regarding the naira’s recovery," said Janet Ogochukwu, senior banker and economist.
According to her, the apex bank is intentional about propping up the naira’s value and sanitising the Forex market.
“CBN has made it clear that it will not be business as usual for authorised traders who undermine the FX market. The new FX Code will enhance the market for sure, she said.
CBN releases new FX Code
Meanwhile, Legit.ng previously reported that the FX Code contains six pillars designed by CBN to promote transparency in the FX market.
These pillars serve as a set of principles recognised as good practices in the global FX exchange market.
The apex bank designed the code to address risks in Nigeria’s growing financial system while boosting the integrity and functionality of the FX market.
Why CBN designed new FX Code
The FX Code’s document disclosed that it was developed in response to Nigeria’s financial transformation over the years.
It seeks to establish standards that ensure the efficient functioning of the wholesale FX market, boosting the country’s exchange rate sector.
“The FX Code is intended to facilitate a fair, liquid, and transparent market environment that inspires confidence among participants,” the document states.
CBN designed the code to promote a robust market with fairness, openness, and adequate transparency, allowing participants to engage in competitive rates that reflect accurate market information.
Naira in massive gain against dollar
Legit.ng earlier reported that the naira rebounded massively against the US dollar in the official market on Tuesday, January 28, 2025, after the Central Bank of Nigeria (CBN) launched the FX code to enhance market transparency.
This is the third day in less than a week that the naira showed strength against the US dollar, after previous declines for 12 months due to Donald Trump’s policies. Experts have praised the CBN for maintaining market liquidity.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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