Over the past two weeks, the Central Bank of Nigeria (CBN) and other financial institutions have injected $2.5 billion into the foreign exchange market, leading to a strengthening of the naira to N1,309 against the US dollar.
According to official data from the FMDQ Securities Exchange, the naira closed at N1,309 per dollar on Thursday, marking a slight increase from the previous day’s rate of N1,300/$1. While this represents an improvement, it still reflects the naira’s eight-week low as it continues to gain ground against the US dollar.
Trading activities were suspended on Friday due to a public holiday, but forex transactions between willing sellers and buyers at the Nigerian Autonomous Foreign Exchange Market surged by 106%, reaching $857 million at the close of trading on Thursday. This level of activity marks the highest turnover since the CBN implemented its new forex policies, surpassing even the highest turnover recorded in 2021.
The average daily forex turnover in March stood at approximately $220 million, with this year’s daily average turnover reaching $177 million. Two weeks ago, the CBN conducted a total sales transaction of $1 billion.
The fluctuation in intraday rates is also notable, with the intraday high closing at N1,392 on Thursday, compared to N1,460 per dollar on Wednesday. Conversely, the intraday low appreciated to N1,250 on Thursday from N1,200 on Wednesday.
The liquidity surge in the forex market is attributed to various policy reforms implemented by the CBN, including the unification of exchange rate windows, liberalization of the FX market, clearance of FX backlog obligations, and imposition of limits on banks’ Net Open Position. Additionally, the removal of the daily cap on remunerable Standing Deposit Facility and overhaul of the Bureau De Change segment have contributed to market vibrancy.
Forex turnover serves as a crucial indicator of market activity and economic stability, reflecting the total value of all foreign exchange transactions within a specific period. High turnover rates signal a dynamic market with active participation, indicative of investor confidence.
In tandem with official market trends, the naira has also appreciated at the parallel market, where the US dollar is currently trading at N1,280. At the black market, the dollar’s selling price ranges between N1,280 and N1,305, reflecting recent forex policy adjustments by the CBN.
