Throughout March 2024, the Nigerian naira experienced a notable appreciation against the US dollar, marking a gain of over N350. This substantial improvement was attributed to various foreign exchange policies, strategies, and interventions implemented by the Central Bank of Nigeria (CBN). It culminated in the naira closing the month at N1,309/$1, up from N1,595.11/$1 at the end of February 2024.
The 21.8% gain in the official exchange rate and the 28% gain in the parallel market are the largest seen in over five years, signaling the effectiveness of the measures taken to stabilize and strengthen the national currency. Previously, the exchange rate had been relatively fixed for an extended period.
ABCON, the Association of Bureau de Change Operators of Nigeria, attributed the recent upside to the CBN’s decision to recall its members into the forex market. Aminu Gwadabe, ABCON’s president, highlighted the significance of this move in stabilizing the exchange rate and boosting dollar liquidity at the retail end of the market.
Gwadabe appreciated the CBN and other relevant agencies for recognizing the vital role of BDCs in the FX market and their efficiency in transmitting exchange rates. He noted that the return of BDCs to the mainstream market has curbed illegal economic behaviors and led to exchange rate convergence.
Moreover, the stability in the exchange rate has begun to positively impact the prices of goods and services, with reductions observed in international school fees, medical tourism costs, and airfares for local and international trips.
Looking ahead, Gwadabe emphasized that a stable naira would attract more foreign portfolio inflows to the economy. He highlighted promising prospects for FX earnings, with Foreign Portfolio Investments (FPI) rising and inflows exceeding $1.5 billion shortly after the Monetary Policy Committee (MPC) raised interest rates.
Gwadabe reaffirmed ABCON’s commitment to collaborating with the CBN to ensure mutual benefits for all members and to prevent exclusion and sector dominance by larger entities.
