Naira strengthens to N1,490/$ in parallel market

Naira has surged to N1,490 per US dollar in the parallel FX market on Wednesday, marking a significant turnaround for the Nigerian currency.

The naira has appreciated by 2% since May 27, when it traded at N1,520, representing a positive shift in the currency’s value.

Bureau de change operators, also known as currency traders, set the buying price of the US dollar at N1,460 and the selling price at N1,490, yielding a profit margin of N30 per dollar exchanged.

In contrast, at the official window, the naira experienced a depreciation of 13.26 percent against the dollar, dropping from N1,173.88/$ on May 28 to close at N1,329.65 on Wednesday.

According to data from FMDQ Exchange, which oversees official FX trading in Nigeria, the exchange rate fluctuated between a high of N1,506 and a low of N1,010 during trading hours.

The daily foreign exchange market turnover stood at $336.54 million.

Recent changes in the foreign exchange market are influenced by the Central Bank of Nigeria (CBN) guidelines released on May 22 for Bureau De Change (BDC) operations in the country.

The CBN increased the capital requirement for tier-1 BDC operators to N2 billion, while tier-2 operators were mandated to have a capital base of N500 million.

However, ABCON appeals to the CBN to reassess the capital requirements, advocating for a more flexible approach. The association proposes a reduction in the minimum capital base for top-tier operators to a range of N500 million to N1 billion, aiming to facilitate mergers and consolidation among BDCs.

ABCON’s Aminu Gwadabe advocates for BDC recapitalization, streamlining regulatory compliance and cutting bureaucratic red tape.