In the last two weeks, the Central Bank of Nigeria and other banking institutions have improved dollar supply to the foreign exchange market by $2.5bn, making the naira strengthen to N1,309 against the United States dollar.
Official figures obtained from the FMDQ Securities Exchange revealed that the naira closed at N1309/$1 on Thursday compared to the N1300/$1 recorded a day earlier. However, it still falls within the eight week low for the Naira as it continues to gain strength against the US dollar.
Trading activities were closed on Friday due to the public holiday.
Similarly, forex transactions between willing sellers and buyers at the Nigerian Autonomous Foreign Exchange Market increased by 106 per cent to $857m at the close of trading activity on Thursday, marking the highest level since the Central Bank implemented its new forex policies.
This latest development is also the largest turnover since 2021, with the closest figure being $760 million on June 2nd, 2022.
The average daily forex turnover recorded in March has been around $220 million, while this year we have seen $177 million in daily average forex turnover.
Penultimate week, the CBN made a total sales of $1bn.
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.
Liquidity in the forex market has been attributed to an array of policies currently implemented by the CBN.
Key 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 of N2 billion on remunerable Standing Deposit Facility, and overhaul of the Bureau De Change segment.
Forex turnover is a critical metric in the financial world as it represents the total value of all foreign exchange transactions completed within a specific timeframe, providing insights into the liquidity and vibrancy of the forex market.
High turnover rates indicate a highly active market with numerous participants engaging in buying and selling currencies, which can signal investor confidence and economic stability.
On the official end of the market, the apex bank started by addressing 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. They stated that they concluded the payment of $1.5 billion to settle obligations to bank customers, effectively settling the residual balance of the FX backlog.
At the parallel market, the naira has continued to appreciate as the US dollar is currently selling at N1,280 on the parallel market.
At the black market, the US dollar sold between N1,280 to N1,305 depending on who is buying and selling, following the recent foreign exchange policy measures of the Central Bank of Nigeria.