Naira records marginal growth on 230.82% rise in dollar liquidity

Naira recorded marginal gains against the US currency following a significant increase in dollar liquidity at the official foreign exchange (FX) market on Monday.

After trading on Monday, naira appreciated by 0.17 percent as one dollar was quoted at N888.35 compared to N889.86 quoted on Friday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), data from the FMDQ showed.

The FX market recorded increased dollar supply as the daily foreign exchange market turnover rose by 230.82 percent to $137.82 million on Monday from $41.66 million recorded on Friday.

The dollar flows came from the willing buyers and willing sellers as they quoted the greenback as high as N1,249 and lower rate of N720 on the spot trading.

According to analysts, the increase in dollar supply in Nigeria’s forex market stems from a combination of the CBN interventions, policy adjustments, market dynamics, and expectations of future inflows. However, ongoing efforts and sustained improvements in the underlying economic conditions are crucial for long-term stability and reducing reliance on temporary measures.

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Yemi Cardoso, governor of the CBN, noted in November 2023 that the country had already witnessed improvements in FX market liquidity in recent weeks, as the market responded positively to tranche payments which have been made to 31 banks to clear the backlog of FX forward obligations.

“We have been subjecting these payments to detailed verification to ensure only valid transactions are honored. In a properly functioning market, it is reasonable to expect significant FX liquidity, with daily trade potentially exceeding $1.0 billion.

We envision that, with discipline and focused commitment, foreign exchange reserves can be rebuilt to comparable levels with similar economies,” he said.

He said new foreign exchange guidelines and legislation will be developed, and extensive consultations will be conducted with banks and FX market operators before implementing any new
requirements.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.