Nigeria’s foreign exchange market experienced a surge in trading activity to $844 million turnover on February 3, the highest dollar trade since June 2, 2022.
This surge underscores the impact of recent reforms initiated by the Central Bank of Nigeria (CBN), particularly under the leadership of Governor Olayemi Cardoso.
The substantial increase in trading volume represents a threefold rise compared to the $266 million traded on February 1.
Analysts attribute this spike to the series of measures unveiled by Governor Cardoso, aimed at enhancing the flexibility of the naira against the dollar and promoting transparency in the official market.
One notable reform involves mandating banks to offload excess dollars, thereby improving supply dynamics.
Also, the CBN removed the cap on transactions by International Money Transfer Operators (IMTOs), further facilitating a more fluid forex market environment.
As a result of these reforms, the embattled naira experienced positive momentum, strengthening to N1419/$ on Monday from N1435/$ on Friday.
However, the parallel market rate has yet to reflect this strength, with the dollar selling for N1455 on the streets on Tuesday, maintaining a 2 percent gap compared to the official rate.
Market observers anticipate that while rates may initially remain stable, sustained supply from Foreign Portfolio Investors (FPIs) and domiciliary accounts will be crucial in alleviating the forex market’s volatility.
The optimism surrounding Nigeria’s forex market underscores the potential of CBN’s policy overhaul to address currency challenges and stimulate economic stability and growth.