Naira Continues Upward Trend As Speculators Count Losses

The naira recently sustained its rally at the official and parallel markets, continuing an upward trend against the U.S. dollar.

A Bureau de Change operator, Alikola Hassan, at Wuse Zone 4, Abuja, said the naira traded at N1,590 per dollar on Wednesday, strengthening from N1,600 on Tuesday—a gain of N10 in just one day. There was a slight decline at the official exchange rate as the naira settled at N1,499.76 per dollar on Wednesday, compared to N1,498.95 on Tuesday.

Some analysts said the currency’s recent gains have been driven by the CBN’s Foreign Exchange Code, introduced recently to improve transparency in the FX market. They also said that the apex bank’s extended FX sales to Bureau de Change operators until May 2025 further stabilised the market.

This development coincides with escalating global trade tensions, as the U.S. launched trade wars with China, Mexico, and other nations under former President Donald Trump. The Trump administration imposed a 10 per cent tariff on selected Chinese imports, prompting China to retaliate with a 15 per cent tariff on U.S. coal and liquefied natural gas. While global trade uncertainty affects many emerging markets, Nigeria’s proactive policy measures shield the naira from excessive volatility.

Analysts noted that the local currency traded below N1,600 to the dollar at the parallel market for the first time in nearly eight months.

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For the CBN Governor Olayemi Cardoso, integrity, fairness, transparency, and efficiency are critical pillars for driving Nigeria’s economic growth and stability. He said, “The FX Code represents a decisive step forward, setting clear and enforceable standards for ethical conduct, transparency, and good governance in our foreign exchange market. The era of opaque practices is over. The FX Code marks a new era of compliance and accountability. Under the CBN Act 2007 and BOFIA Act 2020, violations will be met with penalties and administrative actions.”
Analysts estimate that FX speculators have lost over N10 billion in the current naira rally and are expected to record more losses as holders of the greenback dump the currency in the open market. Analysts from Cordros Securities reported that the naira strengthened significantly last week, appreciating by 3.8 per cent week-on-week to N1,474.78/$ at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

Similarly, managing director of Afrinvest West Africa Limited, Ike Chioke, reported a 4.3 per cent month-on-month gain in the naira against the dollar, closing at N1,497/$1. The parallel market rate also appreciated by 1.7 per cent to N1,580.00/$1.00. Chioke projected a sustained positive performance for the naira this month, supported by the CBN’s continued efforts to entrench transparency in market operations.

“In the new month, we expect the naira to remain on a positive trajectory bolstered by the CBN’s efforts at currency stability,” he said in an emailed note to investors.

An economist, Dr Lanre Oyedele, said that the naira rally has been bolstered by several key factors, including Inflows from foreign portfolio investors (FPIs); renewed interest from FPIs has increased dollar liquidity in the market, strengthening the naira; contributions from International Oil Companies (IOCs); increased FX inflows from IOCs have further stabilised the market; and CBN’s Intervention.

The CBN has injected $18.40 million into the FX market through authorised dealers, improving Market Confidence. Transparency-driven reforms have restored investor confidence and curbed speculative attacks on the naira.

The president of the Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, attributed the naira’s rebound against the dollar to the CBN’s proactive policies. He highlighted the Foreign Exchange (FX) Code, rising investor confidence, and policies promoting dollar inflows through diaspora remittances as key drivers of the currency’s rally. “The FX Code will further entrench transparency and accountability in the FX market and continually sustain the naira’s rally,” he said.

CEO of Countryside Markets Limited, Stevens Michael, expressed optimism about the reforms, stating: “The whole idea is to ensure more sanity in the foreign exchange market because certain practices have created significant problems over the years. The more we sanitise the markets, the more stability we will achieve in the foreign exchange market.”

The CBN reaffirmed that while the FX Code comprehensively addresses various aspects of market conduct and practice, it is not intended to be exhaustive, adding that the regulatory framework will continue to evolve in response to market developments.

Governor Cardoso also noted that the journey towards market reform is already yielding results. He stated, “The year 2024 was marked by structural reforms that sought to return the naira to a freely determined market price and ease volatility as several distortions were removed from the market.”

Cardoso explained that the apex bank focuses on sustaining price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship. “These actions have yielded measurable progress: relative stability in the FX market, narrowing exchange rate disparities, and a rise in external reserves to over $40 billion as of December 2024. The CBN also focused on strengthening the banking sector, introducing new minimum capital requirements for banks (effective March 2026) to ensure resilience and position Nigeria’s banking industry for a $1 trillion economy.

“As we shift from unorthodox to orthodox monetary policy, the CBN remains committed to restoring confidence, strengthening policy credibility, and staying focused on its core mandate of price stability,” Cardoso said.
Already, remittances through International Money Transfer Operators (IMTOs) rose 79.4 per cent to US$4.18 billion in the first three quarters of 2024.

However, analysts said achieving macroeconomic stability requires sustained vigilance and a proactive monetary policy stance.

Commercial banks are major stakeholders in implementing the FX Code. Analysts have, therefore, called on the CBN to institute strong compliance checks to ensure that banks, which in the past constituted one of the weakest links to FX policy implementation, comply with the new policy measures.

Analysts expect the naira to maintain its positive trajectory with sustained policy interventions, foreign investments, and improved economic fundamentals. According to them, while global trade tensions may pose external risks, Nigeria’s proactive measures would provide a strong foundation for continued currency stability adding that as the CBN enforces its new policies, speculators who once thrived on market opacity increasingly face losses, further reinforcing confidence in the naira’s long-term resilience.