Naira Strengthens to N1,309/$ as Banks Inject $2.5 Billion into Market

The Central Bank of Nigeria (CBN) and other banking institutions have injected $2.5 billion into the foreign exchange market, resulting in a strengthening of the naira to N1,309 against the United States dollar.

Official data from the FMDQ Securities Exchange indicates that the naira closed at N1309/$1 on Thursday, marking a slight improvement from the N1300/$1 recorded a day earlier. Despite this, the naira remains at an eight-week low against the dollar, showcasing its continuous resilience and strengthening trend.

Trading activities were suspended on Friday due to a public holiday.

Moreover, transactions at the Nigerian Autonomous Foreign Exchange Market saw a remarkable 106% increase to $857 million by the close of Thursday’s trading session. This surge represents the highest level since the implementation of the CBN’s new forex policies and marks the largest turnover since 2021, with the closest figure recorded at $760 million on June 2nd, 2022.

The average daily forex turnover for March stood at approximately $220 million, while this year has witnessed a daily average turnover of $177 million.

Just last week, the CBN conducted forex sales totaling $1 billion.

Analysis of the FX trading data reveals that the intraday high closed at N1392 on Thursday, up from N1,460 per dollar the previous day, while the intraday low appreciated to N1,250 from N1,200 on Wednesday.

The increased liquidity in the forex market is 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, 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 critical metric in the financial landscape, reflecting the total value of all foreign exchange transactions completed within a specific period. It provides insights into the liquidity and vibrancy of the forex market, with high turnover rates indicating a highly active market and signaling investor confidence and economic stability.

On the official end of the market, the CBN has taken measures to address suspected cases of excessive foreign currency speculation and hoarding from Nigerian banks. Additionally, the apex bank announced the complete clearance of the valid foreign exchange backlog, settling obligations to bank customers by paying $1.5 billion, effectively eliminating the residual balance of the FX backlog.

At the parallel market, the naira continues to appreciate, with the US dollar selling at N1,280. Depending on the buyer and seller, the dollar traded between N1,280 to N1,305 at the black market, following recent foreign exchange policy measures implemented by the CBN.