The exchange rate between the Naira and the US Dollar reflects the continued struggle in Nigeria’s foreign exchange market. On the official platform, FMDQ, the Naira opened at ₦1,560.20/$1 on Thursday, January 16, 2025, and closed at ₦1,547.58/$1 the next day. However, in the parallel market, the Naira traded as high as ₦1,667/$1, highlighting the disparity between official and black market rates despite efforts to unify the FX market.
The Central Bank of Nigeria (CBN) had earlier introduced significant reforms to consolidate all FX windows into the Investors & Exporters (I&E) window. This unification aims to enhance transparency and allow transactions like medical fees, school fees, and SMEs to flow seamlessly through banks. The CBN also reinstated the “Willing Buyer, Willing Seller” model and order-based trading, signaling a move toward a more market-driven FX system.
These reforms suggest a shift toward a free-floating Naira, where market forces dictate exchange rates without heavy central bank intervention. While this move encourages transparency and aligns with global practices, the continued depreciation of the Naira underscores the challenges in stabilizing the economy and curbing volatility in the FX market.