Over the past fortnight, the Central Bank of Nigeria (CBN) and other financial institutions have bolstered dollar supply to the foreign exchange market by $2.5 billion, resulting in the strengthening of the naira to N1,309 against the United States dollar.
Official data from the FMDQ Securities Exchange indicates that the naira closed at N1,309/$1 on Thursday, compared to the previous day’s rate of N1,300/$1.
Although it represents an improvement, it still falls within the eight-week low for the naira as it continues to gain traction against the US dollar. Trading activities were halted on Friday due to a public holiday.
Similarly, forex transactions between willing sellers and buyers at the Nigerian Autonomous Foreign Exchange Market surged by 106 percent to $857 million at the close of trading on Thursday, marking the highest level since the implementation of the CBN’s new forex policies.
This milestone also represents the largest turnover since 2021, with the closest figure recorded being $760 million on June 2nd, 2022.
The average daily forex turnover for March has hovered around $220 million, with a yearly average of $177 million. In the penultimate week, the CBN conducted a total sales of $1 billion.
Notably, the intraday high closed at N1,392 on Thursday, up from N1,460 per dollar the previous day, while the intraday low appreciated to N1,250, compared to N1,200 on Wednesday.
The surge in liquidity in the forex market is attributed to various policy reforms initiated by the CBN. These reforms include the unification of exchange rate windows, liberalization of the FX market, clearance of FX backlog obligations for banks and airlines, implementation of a Price Verification System, imposition of limits on banks’ Net Open Position, removal of the daily cap on remunerable Standing Deposit Facility, and overhaul of the Bureau De Change segment.
Forex turnover serves as a critical indicator of market activity, reflecting the total value of all foreign exchange transactions completed within a specific period. High turnover rates signify an active market with numerous participants engaging in currency trading, which can signal investor confidence and economic stability.
On the official front, the CBN addressed suspected cases of excessive foreign currency speculation and hoarding from Nigerian banks.
The apex bank also announced the complete clearance of the valid foreign exchange backlog, settling obligations totaling $1.5 billion to bank customers.
In the parallel market, the naira continued its appreciation, with the US dollar selling at N1,280. At the black market, the dollar traded between N1,280 to N1,305, reflecting recent forex policy measures by the CBN.
