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The naira kicked off the new month with a strong performance, strengthening to N1,278.58 against the US dollar compared to N1,309.39 per dollar recorded last Thursday.
This reflects a gain of N30.81 by the end of the trading session.
Data from FMDQ Securities shows that the indicative exchange rate for the Nigerian Autonomous Foreign Exchange Market closing below the N1,300 ceiling marks the first occurrence since January 26 of this year.
On March 13, 2024, the naira depreciated to as low as N1,615/$1. Since the implementation of various forex policies by the central bank, the naira has appreciated by over 21 percent against the dollar since March.
The liquidity observed in the forex market is attributed to a series of policies enacted 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 serves as a vital measure in the financial sector, representing the total value of all foreign exchange transactions conducted within a specific period. It offers insights into the liquidity and activity level 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.
In the last two weeks, the Central Bank of Nigeria and other banking institutions improved dollar supply to the foreign exchange market by $2.5bn.
Similarly, forex transactions between willing sellers and buyers at the Nigerian Autonomous Foreign Exchange Market reduced by 106 per cent to $111.18m on Tuesday from $857m at the close of trading activity last week Thursday.
The summary of the FX trading revealed that the intraday high closed at N1,312 from 1392 per dollar on last Thursday. Also, the intraday low remained at N1,250 it traded last Thursday.
The foreign exchange resumed on Tuesday after the Easter holiday with the Naira appreciating at the parallel market to N1,220. Bureau De Change operators bought at N1,220 per dollar and sold either through cash or transfer to customers at N1,265/$ with a profit margin of N30.
This represents 1.99 per cent appreciation over N1,280 closed last week.
The Naira strengthened in both the official and parallel market segments following the Central Bank of Nigeria’s move to clear all verified FX backlogs (final tranche of $1.5bn).
The Naira which appreciated by 21.8 percent month-on-month in March 2024 is expected to maintain the trend in April, following the policy measures of the Central Bank.
