CBN Policies Pay Off, Naira Regains Pride

The Central Bank of Nigeria (CBN)’s recent moves to see the nation’s currency, the Naira regain its pride and stop its daily descent has begun to yield positive results as the naira begins the new month of April on a bullish note, appreciating to N1,278.58 against the United States dollar from N1,309.39 per dollar recorded last week Thursday.

This indicates an increase of N30.81 at the close of trading activity.

According to data from FMDQ Securities, the indicative exchange rate for the Nigerian Autonomous Foreign Exchange Market closing below the N1,300 ceiling marks the first instance since January 26 of this year.

The naira depreciated to as low as N1,615/$1 on March 13, 2024.

Since the introduction of a slew of forex policies by the central bank, the naira has gained over 21 per cent on the dollar since March.

Liquidity in the forex market has been attributed to an array of policies currently implemented by the CBN.

Key reforms include the unification of exchange rate windows, liberalisation 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 overhaul of the Bureau De Change segment.

Forex turnover is a critical metric in the financial world as it represents the total value of all foreign exchange transactions completed within a specific timeframe, providing insights into the liquidity and vibrancy 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.