Following the Central Bank of Nigeria’s decision to float the national currency against the dollar and other global currencies, the naira experienced a significant appreciation, closing at 663.04/dollar on Friday.

Within a 24-hour period, the currency strengthened by approximately 5.9%, compared to the previous rate of N702.19/dollar recorded on Thursday.

The removal of the rate cap on the naira at the official Investors’ and Exporters’ Windows by the CBN was well-received by the organized private sector and economists.

This move is expected to unify the country’s multiple exchange rates and stimulate the foreign exchange market.

Market participants are now able to quote rates that align with their preferences, rather than relying on dictated rates from the CBN.

While the official rate appreciated, the parallel market witnessed a depreciation, opening at N750/dollar and closing at N760/dollar on Friday.

However, financial institutions such as Morgan Stanley and JP Morgan project that the naira will appreciate further in the near term, with a convergence between the I&E rate and the parallel market rate anticipated.

The International Monetary Fund (IMF) expressed its support for the unified exchange rate regime and pledged assistance to Nigeria in implementing foreign exchange reforms.