Dollar volumes double as Nigeria Central Bank shakes up market

Dollars trading more than doubled in Nigeria’s foreign-exchange market after the central bank announced a series of measures that enabled the naira to trade more freely against the greenback.

A total of $440 million traded in the West African nation’s foreign-exchange market on Friday, the highest since June 2022, according to data compiled by the FMDQ OTC Ltd. exchange. That compares with $157 million on Thursday.

The naira plunged 38% against the dollar last week after the central bank allowed a change in the method for setting its rate in the official foreign-exchange market, cracked down on misleading price reporting by traders and on speculation against the naira by lenders.

The central bank also eased rules on international money transfers to allow them to sell inflows at prevailing market rates and ordered banks to sell down their excess dollars.

The reforms have resulted in the official naira rate closing a gap of about 30% with the parallel market value.