The supply of the U.S. Dollar and other foreign currencies surged by 117 percent at Nigeria’s foreign exchange (FX) market on Friday, boosting liquidity and strengthening the Naira. Data from FMDQ revealed that foreign exchange transaction turnover increased significantly to $190.57 million, up from $87.51 million recorded on Thursday. This marked an impressive $103 million rise in FX market liquidity within just 24 hours.
The increased dollar supply comes as a positive development for Nigeria’s struggling currency, which saw gains in both the official and parallel markets. On Friday, the Naira traded at N1,541.52 at the official market and N1,663 at the parallel market, signaling an improved position compared to previous trading sessions. The currency’s performance at the close of the week brought some relief to the market, which has been grappling with volatility in recent times.
Analysts attribute the rise in FX supply to various factors, including improved liquidity from exporters and foreign investors, as well as the Central Bank of Nigeria’s (CBN) continued interventions in the market. This surge in dollar availability has helped ease some of the pressure on the Naira, leading to a more favorable exchange rate environment.
The Naira’s recovery, albeit slight, is being watched closely by market participants, especially as the country continues to navigate the economic impact of various fiscal and monetary policies. While challenges remain, such as inflation and foreign currency shortages, the increased liquidity is seen as a positive step toward stabilizing the foreign exchange market.
As the week ended on a good note, both businesses and individuals hope that the trend will continue, leading to more stability in the Naira’s value and a reduction in the gap between official and parallel market rates.
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