Forex Turnover Hits $23.29bn in Six Months as CBN Reforms Boost Liquidity

Forex turnover at the official foreign exchange market has increased to $23.29bn within over six months of trading following a flurry of reforms by the Central Bank of Nigeria, findings by The PUNCH have shown.

This was as the naira traded against the United States dollar between the rate of N980 and N1,500 per dollar between January and June.

On Friday, the naira closed at N1,485 against the dollar at the close of trading activity.

An analysis of reports and data of daily forex transactions recorded on the website of FMDQ Securities, a platform that publishes official foreign exchange trading in the country, indicated that the figure increased by 15 per cent or $0.6bn between January and June 21st through the Nigerian Autonomous Foreign Exchange by Deposit Money Banks.

Commercial banks, CBN and international oil firms are the major sellers of forex at NAFEM.

An analysis showed that $4bn of forex transactions was sold in January. It increased by 46.5 per cent or $1.86bn to $5.14bn in February.

The figure however dropped to $4.7bn in March, and $2.5bn in April. In May, dollar sales increased by 84 per cent or $2.1 to $4.60bn.

A further breakdown of the dollar supply showed that the forex market recorded a $4bn turnover in January and increased by $3.3bn within two weeks (February 2 to 16) of implementing a new rule, asking banks to sell their excess dollar stock to improve liquidity in the FX market within 24 hours.

In the weeks that followed, the supply stabilised, recording $890.65m between February 19 and 23. This inflow increased to $953.02m in the week ending February 26 to March 1.

According to data sourced from the FMDQ Security Exchange, forex sales data showed that there was improved liquidity in the market as a $4.7bn transaction was sold in March.

However, FX sales reduced by 51 per cent month-on-month to $2.5bn coinciding with the observed naira depreciation in April.

In the month of May, Nigeria‘s currency, ended the month weaker, despite a surge in dollar supply amounting to $4.60bn in the official FX market.

Also, forex trading between willing buyers and sellers amounted to $2.29bn within 12 days of trading activities in June.

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