Nigeria’s naira strengthened slightly on Monday, trading at N1,597 to the dollar in the official market from Friday’s close of N1,599.01 to the dollar.Â
The Central Bank of Nigeria (CBN) fixed the exchange rate. The parallel market strengthened slightly, with the naira trading at N1,627 per dollar from the previous trading day’s N1,628, an investigation by Nairametrics market analysts in Lagos indicated.
Even amid persistent intraday volatility, the local currency has otherwise been highly resilient and robust when the naira gained as high as N1,601.5 and dipped as low as N1,580 per dollar. That is in the backdrop of the fact that the market remains eagerly awaiting the 300th Monetary Policy Committee (MPC) of the Central Bank on May 19 and 20, 2025.
Money managers watch the near-term MPC decision closely. While everyone is focusing on keeping the present Monetary Policy Rate (MPR) of 27.5 percent to sustain recent gains, a small increment cannot be excluded either. A 25 basis point increase has been forecasted to be in the pipeline to contain receding but amazingly high inflation.
In its previous meeting, the MPC, in the February meeting, did not change key parameters by keeping the Liquidity Ratio at 30 percent and the Cash Reserve Ratio at 50 percent for commercial banks and merchant banks, respectively, and 16 percent for merchant banks.
Conversely, the Bureau De Change (BDC) space is under intense squeeze with the impending recapitalization deadline for the new capital adequacy rules. The CBN’s new minimum of N2 billion for Tier 1 and N500 million for Tier 2 licenses is a quantum leap from the recent minimum of N35 million.
Aminu Gwadebe, President, ABCON, indicated that only under five percent of the operators had met the new capital threshold. This led to serious doubts about a shutdown wave, and industry players demanded that the deadline be rolled over to avoid serious dislocation of the retail foreign exchange market.
