Dollar crashes across FX markets as speculators lose

… External reserves decline $1.13bn

The dollar crashed sharply across foreign exchange (FX) markets in the last two days, after the Central Bank of Nigeria (CBN) launched the FX Code in the Nigerian Foreign Exchange Market (NFEM).

In the official market, the naira gained 1.5 percent or N22.91 as the dollar was quoted at N1,510.72 on Wednesday compared to N1,533.63 quoted on Monday before the launch of the FX code, data from the FMDQ Securities Exchange Limited indicated.

This was computed based on FMDQ Exchange FX closing rate using data from Bloomberg BMatch.

Compared with N1,531.20 on Friday, the naira appreciated by N20.48, marking a 1.35 percent gain within three trading days in the NFEM. On a day-on-day trading, the naira strengthened by 0.79 percent or N11.96 on Wednesday from N1,522.68 closed on Tuesday at NFEM, according to data from the FMDQ.

The local currency closed at N1,625 in the parallel market, popularly called black market, on Wednesday, a day after the CBN launched the FX Code in the market.

The naira gained 0.55 percent or N9 on Wednesday as the dollar traded for N1,625 as against an average rate of N1,634 quoted on Tuesday in the black market.

Nigeria’s external reserves have declined by $1.13 billion year-to date to $39.79 billion as of January 28, 2025 from the peak of $40.92 billion as of January 6, 2025, data from the CBN showed.

The CBN has released a new FX Code aimed at enhancing liquidity, transparency and guiding market participants in Nigeria’s foreign exchange sector.

The code represents a set of principles widely recognised as good practices in the global foreign exchange market. The CBN, in its regulatory and supervisory role, crafted the FX Code to address risks in Nigeria’s evolving financial landscape while strengthening the integrity and functionality of the foreign exchange market.