In a bid to bolster the foreign exchange market, the Central Bank of Nigeria (CBN) alongside other banking institutions has infused $2.5 billion, leading to a strengthening of the naira against the United States dollar.
According to official figures from the FMDQ Securities Exchange, the naira closed at N1,309 against the dollar on Thursday, marking an improvement from the previous day’s rate of N1,300.
Although this surge still falls within the eight-week low for the naira, it underscores a continued uptrend in its value against the dollar.
Forex transactions at the Nigerian Autonomous Foreign Exchange Market soared by 106 percent to $857 million, recording the highest level since the implementation of the CBN’s new forex policies.
This surge marks the largest turnover since 2021, with the closest figure being $760 million recorded on June 2nd, 2022. Notably, the average daily forex turnover for March stood at approximately $220 million, whereas the daily average for this year has been $177 million.
The recent liquidity surge in the forex market is attributed to a series of policy reforms spearheaded 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 an overhaul of the Bureau De Change segment.
Forex turnover, a vital metric in the financial realm, indicates the total value of all foreign exchange transactions within a specific timeframe, offering insights into market liquidity and vibrancy. High turnover rates signify a dynamic market with active participation, which often reflects investor confidence and economic stability.
On the official end of the market, the CBN addressed suspected cases of excessive foreign currency speculation and hoarding by Nigerian banks. Additionally, the apex bank announced the complete clearance of valid foreign exchange backlogs, concluding the payment of $1.5 billion to settle obligations to bank customers, effectively clearing the residual balance.
In parallel markets, the naira continued its appreciation, with the US dollar selling at N1,280. This appreciation is attributed to recent foreign exchange policy measures implemented by the CBN.
At the black market, the US dollar traded between N1,280 to N1,305, depending on the buyer and seller, further reflecting the impact of the CBN’s interventions on market dynamics.
