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Naira Strengthens as Forex Turnover Hits Record Highs

In a significant boost to Nigeria’s forex market, the Central Bank of Nigeria (CBN) and other banking institutions have injected a staggering $2.5 billion over the past two weeks. This surge in dollar supply has propelled the naira to strengthen, with the exchange rate reaching N1,309 against the United States dollar.

Official data from the FMDQ Securities Exchange revealed that the naira closed at N1309/$1 on Thursday, marking a slight uptick from the previous day’s rate of N1300/$1. Despite this, the naira remains within its eight-week low, steadily gaining strength against the US dollar.

Trading activities were halted on Friday due to a public holiday, but the momentum in the forex market continued to surge.

Forex transactions between willing sellers and buyers at the Nigerian Autonomous Foreign Exchange Market skyrocketed by a remarkable 106 per cent to $857 million by the close of Thursday’s trading session. This marks the highest level of turnover since the implementation of the CBN’s new forex policies and stands as the largest turnover since 2021, eclipsing the previous high of $760 million recorded on June 2nd, 2022.

The average daily forex turnover for March hovered around $220 million, showcasing a substantial increase compared to the $177 million daily average turnover witnessed earlier this year.

The CBN’s proactive measures, including the unification of exchange rate windows and liberalization of the FX market, have significantly boosted liquidity in the forex market. Additionally, policies such as the clearance of FX backlog obligations, implementation of a Price Verification System, and removal of caps on banks’ Net Open Position have contributed to the vibrant trading activity.

Furthermore, the apex bank announced the complete clearance of valid foreign exchange backlog, settling obligations to bank customers to the tune of $1.5 billion. This move has effectively addressed suspected cases of excessive foreign currency speculation and hoarding by Nigerian banks.

At the parallel market, the naira’s appreciation persists, with the US dollar currently trading at N1,280. This trend follows recent foreign exchange policy measures by the CBN, indicating growing confidence in the local currency and the overall stability of the forex market.

As Nigeria’s forex market witnesses unprecedented liquidity and activity, stakeholders anticipate continued economic resilience and sustained growth momentum in the coming months. The surge in forex turnover underscores investor confidence and highlights the nation’s robust financial infrastructure amidst global economic uncertainties. 💹📊

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