The Nigerian currency, the naira, has kicked off the new month on a positive trajectory, showing resilience by appreciating N1,278.58 against the United States dollar, compared to the N1,309.39 recorded just last week Thursday. This represents a notable increase of N30.81 by the close of trading activities.
Data sourced from FMDQ Securities indicates that the indicative exchange rate for the Nigerian Autonomous Foreign Exchange Market closing below the N1,300 ceiling marks a significant milestone, being the first instance since January 26 of this year.
It’s worth noting that the naira experienced a low point on March 13, 2024, depreciating to as low as N1,615/$1. However, since the implementation of various forex policies by the central bank, the naira has made impressive gains of over 21 percent against the dollar since March.
The surge in liquidity within the forex market can be attributed to a series of policy reforms initiated by the Central Bank of Nigeria (CBN). These 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 N2bn on remunerable Standing Deposit Facility, and a revamp of the Bureau De Change segment.
Forex turnover, a vital metric in the financial landscape, reflects the total value of all foreign exchange transactions completed within a specific timeframe, offering insights into market liquidity and activity levels.
High turnover rates indicate a dynamic market with active participation from various stakeholders, signaling confidence among investors and fostering economic stability.
Over the past fortnight, the Central Bank of Nigeria, in collaboration with other banking institutions, has bolstered dollar supply to the foreign exchange market by $2.5bn. Additionally, forex transactions between willing sellers and buyers at the Nigerian Autonomous Foreign Exchange Market saw a reduction of 106 percent to $111.18m on Tuesday, compared to $857m recorded at the close of trading activities last week Thursday.