The Central Bank of Nigeria and other financial institutions have increased the dollar supply to the foreign exchange market by $2.5 billion over the past two weeks, which has caused the naira to strengthen to N1,309 against the US dollar.
According to official data from the FMDQ Securities Exchange, the naira closed at N1309/$1 on Thursday, down from N1300/$1 the day before. The Naira is still below its eight-week low, though, as it keeps getting stronger against the US dollar.
Due to the public holiday, trading was not permitted on Friday.
Similarly, at the close of trading on Thursday, the amount of foreign exchange transactions between willing sellers and buyers at the Nigerian Autonomous Foreign Exchange Market increased by 106% to $857 million, the highest amount since the Central Bank’s new forex policies went into effect.
With the closest amount being $760 million on June 2, 2022, this most recent development is also the highest turnover since 2021.
This year, the average daily forex turnover has been $177 million, compared to the $220 million recorded in March of last year.
The CBN generated $1 billion in sales in the penultimate week.
The summary of the FX trading revealed that the intraday high closed at N1392 on Thursday from N1,460 per dollar on Wednesday, The intraday low appreciated to N1,250 on Thursday as against N1,200 closed on Wednesday.
Many of the CBN’s current policies have been credited with increasing liquidity in the forex market.
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Unification of exchange rate windows, liberalization of the foreign exchange market, clearing bank and airline FX backlogs, establishment of a Price Verification System, limitations on banks’ Net Open Position, elimination of the daily N2 billion cap on remunerable Standing Deposit Facility, and reorganization of the Bureau De Change division are some of the major reforms.
Forex turnover, which shows the total value of all foreign exchange transactions completed within a given timeframe and offers insights into the liquidity and liveliness of the forex market, is a crucial metric in the financial industry.
A market with a high turnover rate is one in which many players are buying and selling currencies, which can be interpreted as a sign of stability and confidence among investors.
The apex bank began addressing suspected cases of excessive foreign exchange speculation and hoarding from Nigerian banks on the official end of the market.
Additionally, the top bank declared that the backlog of legitimate foreign exchange had been fully cleared. They declared that they had paid $1.5 billion to settle debts owed to bank clients, which essentially cleared the remaining amount in the FX backlog.
Since the US dollar is currently trading at N1,280 on the parallel market, the value of the naira has increased.
In line with recent foreign exchange policy measures implemented by the Central Bank of Nigeria, the US dollar is currently selling for between N1,280 and N1,305 on the black market, depending on who is buying and selling.
