The Nigerian naira kicked off the month on a positive trajectory, surging to N1,278.58 against the US dollar from N1,309.39 per dollar last week Thursday. This signifies a notable increase of N30.81 in trading activity.
Data from FMDQ Securities reveals that the indicative exchange rate for the Nigerian Autonomous Foreign Exchange Market closed below the N1,300 ceiling for the first time since January 26 this year.
Just weeks ago, on March 13, 2024, the naira had depreciated to as low as N1,615/$1. However, since the implementation of various forex policies by the central bank, the naira has seen a remarkable 21% appreciation against the dollar since March.
The surge in liquidity in the forex market is attributed to a series of policy reforms introduced by the CBN. These reforms include the unification of exchange rate windows, liberalization of the FX market, and the clearance of FX backlog obligations for banks and airlines, among others.
Forex turnover, a crucial metric indicating the total value of foreign exchange transactions, has witnessed a significant increase, signaling a vibrant and active market.
Recent efforts by the Central Bank of Nigeria and other banking institutions have bolstered dollar supply to the forex market by $2.5bn. Additionally, forex transactions at the Nigerian Autonomous Foreign Exchange Market decreased by 106% to $111.18m on Tuesday from $857m recorded last week Thursday.
In the parallel market, the naira appreciated to N1,220, with Bureau De Change operators purchasing at N1,220 per dollar and selling at N1,265/$, reflecting a 1.99% appreciation compared to last week’s close.
Currency traders attribute the naira’s appreciation to reduced demand for the dollar and the CBN’s decision to sell foreign exchange directly to operators.
Looking ahead, analysts predict that the naira will maintain its upward trajectory in April as the CBN continues its efforts to mop up liquidity and attract more capital, signaling positive prospects for the Nigerian currency against the dollar.
