The naira has strengthened across foreign exchange (FX) markets in the last two days, after the Central Bank of Nigeria launched the FX code in the Nigerian Foreign Exchange Market (NFEM).
This is following assurances that the Central Bank of Nigeria (CBN) will soon commence final settlements of the outstanding amount from the $7 billion foreign exchange obligation backlog.
The value of the naira further firmed at the official end of the foreign exchange market, selling at N1500.78 to the dollar on Thursday.
The naira which began this week’s trading activities at N1,533.26 to the dollar had weakened by the close of business on Monday to N1,534.54. By the end of Tuesday, the value of the naira began its appreciation after the launch of the Nigeria Foreign Exchange Code.
It further appreciated to N1,508.39 to the dollar on Wednesday before closing at N1,500.78 to the dollar on Thursday. At the parallel market, the naira rescinded some of its appreciation to close at N1,635 to the dollar on Thursday.
The naira, which began the week’s trading activity at N1,660 to the dollar at the parallel market, had appreciated to N1,650 and N1,640 to the dollar on Monday and Tuesday. At the close of business on Wednesday, it further appreciated to N1,630 to the dollar.
At the launch of the Nigeria Foreign Exchange Code on Tuesday, the CBN governor, Olayemi Cardoso had disclosed that the forensic verification process for the foreign exchange backlog is near completion and final settlements set to be processed accordingly.
Noting that the foreign exchange reforms including the FX Code is bringing to an end era in which participants in the market undertook unethical practices and took advantage of the system.
“We must not forget where we are coming from. The era of multiple exchange rates, which created privileges for a select few at the expense of most Nigerians, severely undermined market integrity.
“As an example, the $7 billion of forex backlogs that has taken over 12 months to verify has led to the discovery of multiple unethical and even illegal practices that we should not be proud of as a nation.
“The forensic verification process is now near complete, and final settlements will be processed accordingly. Similarly, the period of unprecedented ways-and-means-financing inflicted significant damage on our economy, contributing to inflation, currency depreciation, and eroded public confidence.
“These practices must never return. The FX Code is a firm rejection of such distortions and an equally firm commitment to a future defined by fairness, trust and market-driven principles.
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