Business
Dollar Drops Sharply As CBN Launches New FX Code
By Benjamin Abioye
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The dollar has experienced a significant drop across foreign exchange (FX) markets following the launch of the FX Code by the Central Bank of Nigeria (CBN) in the Nigerian Foreign Exchange Market (NFEM).
Over the past two days, the naira strengthened by 1.5% or N22.91, with the dollar dropping from N1,533.63 on Monday to N1,510.72 on Wednesday. The naira also appreciated by 1.35% within three days, gaining N20.48 from Friday’s rate of N1,531.20.
On Wednesday alone, the naira saw a day-on-day improvement of 0.79%, strengthening by N11.96 from the previous day’s closing rate.
In the parallel market, or black market, the naira gained 0.55% on Wednesday, closing at N1,625 against the dollar, a slight improvement from Tuesday’s average rate of N1,634. This drop in the dollar’s value comes after the introduction of the FX Code by the CBN, which aims to increase liquidity, transparency, and provide guidance for market participants in Nigeria’s foreign exchange sector.
Meanwhile, Nigeria’s external reserves have dropped by $1.13 billion this year, falling from $40.92 billion on January 6 to $39.79 billion as of January 28, 2025. The CBN’s FX Code is designed to enhance the functionality and integrity of the foreign exchange market, addressing potential risks in the country’s financial landscape while aligning with global best practices.
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