The Naira has kickstarted the new month on a robust note, witnessing a bullish surge to N1,278.58 against the United States dollar from N1,309.39 per dollar recorded the previous week Thursday. This represents a significant increase of N30.81 at the close of trading activities.
Data from FMDQ Securities reveals that the indicative exchange rate for the Nigerian Autonomous Foreign Exchange Market has dipped below the N1,300 ceiling, marking the first instance since January 26 of this year.
The Naira had experienced a sharp depreciation to as low as N1,615/$1 on March 13, 2024. However, since the implementation of various forex policies by the Central Bank, the Naira has shown resilience, gaining over 21 per cent against the dollar since March.
The surge in liquidity in the forex market has been attributed to a series of policy reforms initiated by the CBN. These reforms include the unification of exchange rate windows, liberalization of the FX market, clearance of FX backlog obligations for banks and airlines, among others.
Forex turnover, a crucial metric in the financial sector, indicates the total value of all foreign exchange transactions completed within a specific timeframe, providing insights into market liquidity and vibrancy. High turnover rates signify an active market with numerous participants engaging in currency transactions, reflecting investor confidence and economic stability.
In the past two weeks, the Central Bank of Nigeria and other banking institutions have bolstered dollar supply to the foreign exchange market by $2.5 billion.
However, forex transactions at the Nigerian Autonomous Foreign Exchange Market have decreased by 106 per cent to $111.18 million on Tuesday from $857 million recorded at the close of trading last week Thursday.
Meanwhile, the Naira appreciated at the parallel market, reaching N1,220. Bureau De Change operators bought at N1,220 per dollar and sold either through cash or transfer to customers at N1,265/$, with a profit margin of N30. This represents a 1.99 per cent appreciation over the N1,280 recorded last week.
The strengthening of the Naira in both official and parallel markets follows the Central Bank of Nigeria’s efforts to clear all verified FX backlogs, amounting to the final tranche of $1.5 billion.
With the Naira showing a robust appreciation of 21.8 per cent month-on-month in March 2024, analysts anticipate the currency to maintain its upward trajectory in April, buoyed by the continued policy measures implemented by the Central Bank.