The Central Bank of Nigeria (CBN) and other banking institutions have significantly bolstered the foreign exchange market by injecting an additional $2.5 billion over the past two weeks.
This strategic move has led to a notable appreciation of the naira, which strengthened to N1,309 against the United States dollar, according to the latest figures from the FMDQ Securities Exchange.
The naira’s performance showed a slight improvement from N1,300/$1, continuing its upward trend and marking an eight-week low.
This gain comes amid the closure of trading activities on Friday due to a public holiday, underscoring the ongoing recovery of the Nigerian currency in the forex market.
Forex transactions also surged, with dealings between willing buyers and sellers at the Nigerian Autonomous Foreign Exchange Market climbing by 106 percent to $857 million at Thursday’s close, reaching the highest level since the CBN implemented new forex policies.
This turnover is the largest seen since 2021, with a notable previous peak at $760 million on June 2nd, 2022.
With an average daily forex turnover of around $220 million in March and $177 million throughout the year, the market has shown robust activity following the CBN’s cumulative sales of $1 billion in the previous week.
The market dynamics further improved, with the intraday high hitting N1,392/$1 and the low appreciating to N1,250/$1.
The liquidity boost in the forex market is largely credited to comprehensive policy reforms by the CBN, including exchange rate unification, market liberalization, and the clearing of foreign exchange backlogs.
These measures have facilitated smoother transactions and enhanced market confidence and stability.
The official market has seen proactive measures against currency speculation and hoarding, with the CBN clearing a substantial foreign exchange backlog of $1.5 billion, thus settling outstanding obligations and stabilizing the forex environment.
In the parallel market, the naira’s value has risen, trading around N1,280 to the US dollar, reflecting the positive impact of the CBN’s policy interventions.
The black market rates have also adjusted, ranging between N1,280 to N1,305, signalling a more balanced and responsive forex market in Nigeria.
