Naira Exchange Rates Converge for First Time in Two Years

ABUJA, Nigeria — The naira’s official and parallel-market exchange rates converged for the first time in nearly two years on Thursday, signaling a significant shift in Nigeria’s foreign exchange landscape. Both markets quoted the naira at N1,510/$, a notable change from the previous divergence that existed since June 2023.

This convergence follows the Central Bank of Nigeria‘s (CBN) decision to extend dollar sales to Bureau De Change Operators (BDCs) until May 30, 2025, aiming to stabilize the currency in the face of ongoing economic challenges. The bank also maintained its benchmark interest rate at 27.5 percent during the announcement.

According to data from BusinessDay and various online platforms that track foreign exchange rates, the naira has appreciated by N155 or 10.3 percent since the beginning of the year, when it was valued at N1,665. The recent black market rate adjustment signifies a sharp decline following the CBN’s policy changes.

Olayemi Cardoso, the CBN governor, discussed the developments during a press briefing after the Monetary Policy Committee (MPC) meeting in Abuja. He revealed that the exchange rate differential between the official market and retail bureaus has dropped to less than one percent. “This is a positive development for our foreign exchange market,” Cardoso noted.

The MPC unanimously decided to hold all monetary parameters, opting to retain the Monetary Policy Rate (MPR) at 27.50 percent. Other benchmarks, including the asymmetric corridor around the MPR, cash reserve ratios, and liquidity ratios, will also remain unchanged.

Cardoso added, “The committee noted with satisfaction recent macroeconomic developments, which are expected to positively impact price dynamics in the near to medium term. This includes a noticeable stability in the foreign exchange market, leading to the appreciation of the exchange rate and a gradual moderation in the price of Premium Motor Spirit (PMS). However, we remain cautious of persisting inflationary pressures, particularly driven by food prices.”

The convergence of the naira’s exchange rates reflects broader attempts by the CBN to streamline currency management and mitigate economic instability in Nigeria, which is currently grappling with high inflation and a fluctuating economy.