The naira started the new month 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 commercial activity.

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

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

Since the introduction of a series of foreign exchange policies by the central bank, the naira has gained more than 21% against the dollar since March.

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

Key reforms include the unification of foreign exchange windows, the liberalization of the foreign exchange market, the settlement of outstanding foreign exchange obligations for banks and airlines, the implementation of a price verification system, the imposition of limits on banks' net open position, the removal of the N2bn daily limit on the Permanent Interest Deposit Facility and the restructuring of the Bureau De Change segment.

Forex trading volume is a critical metric in the financial world as it represents the total value of all forex transactions completed within a specific time frame, providing information about the liquidity and vibrancy of the forex market.

High turnover rates indicate a highly active market, with numerous participants involved 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 have improved the supply of dollars to the foreign exchange market by US$2.5 billion.

Similarly, foreign exchange transactions between willing sellers and buyers on the Nigerian Autonomous Foreign Exchange Market reduced by 106% to US$111.18 million on Tuesday from US$857 million at the close of last week's trading activity , Thursday.

Currency trading summary revealed that the intraday high closed at N1,312 from 1,392 per dollar last Thursday. Furthermore, the intraday low remained at N1,250 traded last Thursday.

The exchange rate resumed on Tuesday, after the Easter holiday, with the Naira appreciating in the parallel market to N1,220. Bureau De Change operators purchased at N1,220 per dollar and sold in cash or by transfer to customers at N1,265/$ with a profit margin of N30.

This represents an appreciation of 1.99 percent from the N1,280 closed last week.

The Naira strengthened in the official and parallel market segments following the decision of the Central Bank of Nigeria to eliminate all exchange rate delays (final installment of 1.5 billion dollars).

The Naira, which appreciated by 21.8 percent month-on-month in March 2024, is expected to maintain the trend in April, following the Central Bank's policy measures.

The currency traders, who spoke with The punch attributed the appreciation of the naira to the decrease in demand for the dollar note and the decision of the main bank to sell foreign exchange to traders.

A BDC operator in Wuse Zone 4, Ibrahim Yahu, said: “The demand for dollars has actually decreased and the naira is appreciating due to the new rate determined by the CBN for traders.

The CBN initially started selling us at N1,251 but gave another rate last week, Thursday, at N1,190 and that is the reason for a further fall in the dollar. Selling CBN directly to us has really helped business activities.”

Another trader, Malam Yunusa, said the naira was poised to maintain its gain against the dollar, adding that traders also want the naira to grow.

The President of the Foreign Exchange Dealers Association of Nigeria, Aminu Gwadabe, recently noted that in addition to the tightening of monetary policy which has resulted in interest rate hikes, increased investment in government instruments and the settlement of future foreign exchange portfolio commitments of US$7 billion, the reactivation of BDCs notably improved dollar liquidity in the retail segment of the forex market.

The Afrinvest analyst also predicted that the naira would trade within a similar range in the month of April as the CBN continued its activities to absorb liquidity and attract more capital.

Source