Naira Ends at 1,309/$ as Banks Unload $2.5 Billion

“Naira Strengthens to N1,309/$ as Banks Sell $2.5 Billion, Boosting Forex Market Liquidity”In recent weeks, the Central Bank of Nigeria and other financial institutions have injected $2.5 billion into the foreign exchange market, leading to a strengthening of the naira to N1,309 against the US dollar. Official data from the FMDQ Securities Exchange shows that the naira closed at N1309/$1 on Thursday, compared to N1300/$1 the previous day, albeit still within the eight-week low range. Friday’s trading was suspended due to a public holiday.Forex transactions at the Nigerian Autonomous Foreign Exchange Market surged by 106%, reaching $857 million by Thursday’s close, marking the highest level since the implementation of new forex policies by the Central Bank. This also represents the largest turnover since 2021, surpassing the $760 million recorded on June 2nd, 2022. March’s average daily forex turnover stood at approximately $220 million, compared to $177 million in the current year.Two weeks ago, the CBN conducted forex sales totaling $1 billion.The intraday high on Thursday closed at N1392, down from N1,460 per dollar on Wednesday, while the intraday low appreciated to N1,250 on Thursday compared to N1,200 the day before.This increase in liquidity in the forex market is attributed to various policies by the CBN, including exchange rate unification, FX market liberalization, 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 on remunerable Standing Deposit Facility, and overhaul of the Bureau De Change segment.Forex turnover is a vital metric in assessing the financial market’s health, indicating the total value of foreign exchange transactions within a specific period. Higher turnover rates signify an active market with increased buying and selling activities, reflecting investor confidence and economic stability.