The Nigerian Naira ends trading at 1,309 to the US Dollar as banks collectively sell $2.5 billion.
Over the past two weeks, the Central Bank of Nigeria and other banking 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. Official data from the FMDQ Securities Exchange revealed this, indicating a slight improvement from the previous day’s rate of N1300/$1. Despite this increase, the Naira remains at its eight-week low against the US dollar, showing continued resilience.
Trading activities were suspended on Friday due to a public holiday. In addition, forex transactions at the Nigerian Autonomous Foreign Exchange Market surged by 106%, reaching $857 million, the highest level since the implementation of new forex policies by the Central Bank.
This recent surge in forex trading marks the largest turnover since 2021, with a close comparison being $760 million on June 2nd, 2022. The average daily turnover in March has been around $220 million, while the yearly average stands at $177 million.
Two weeks ago, the CBN conducted total sales of $1 billion. Forex trading data revealed that on Thursday, the intraday high closed at N1392 compared to N1,460 per dollar on Wednesday. Conversely, the intraday low appreciated to N1,250 on Thursday from N1,200 the previous day.
The increase in liquidity in the forex market can be attributed to various policies implemented by the CBN,
The increase in liquidity in the forex market can be attributed to various policies implemented by the CBN, including the unification of exchange rate windows, liberalization of the FX market, clearance of FX backlog obligations, 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 is a crucial metric, indicating the total value of foreign exchange transactions completed within a specific timeframe, providing insights into market liquidity and activity. High turnover rates reflect an active market with numerous participants engaging in currency trading, which can signal investor confidence and economic stability.
On the official front, the apex bank has addressed suspected cases of excessive foreign currency speculation and hoarding by Nigerian banks. Additionally, it announced the complete clearance of valid foreign exchange backlogs, settling obligations to bank customers by paying $1.5 billion, effectively clearing the residual balance of the FX backlog.
