The recovery comes after the currency’s value plummeted in the wake of economic reforms imposed by President Bola Tinubu’s administration after he took office last May. He removed a fixed currency peg and scrapped a system of multiple exchange rates, instead allowing the naira’s value to be market determined. The exchange rate was about 755 naira to the dollar in the two weeks after Tinubu took office, but crossed 1,000 naira to the dollar by the end of 2023.
The Central Bank of Nigeria (CBN) has devalued the naira twice in the last year, most recently in January, and hiked the benchmark interest rate by 600 basis points since February to 24.75% to tackle galloping inflation.
Some of the inflationary pressure has been caused by foreign exchange problems. Nigeria has faced dollar shortages in recent years following revenue shortfalls from the oil industry, partly caused by pipeline sabotage.
The CBN currently sells $20,000 to licensed bureau de change traders at a fixed price each week, restoring a policy suspended in 2021. It is also selling more dollars to deposit banks, while revising their codes of operation. Banks operating internationally will now require 500 billion naira ($353 million) as their capital.
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