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.