Super-sized liquidity returns to Nigeria’s FX market as daily trades near $1bn

Nigeria’s foreign exchange market experienced its highest turnover in a single day since 2017 on Thursday, with a total of $857.78 million traded, according to data from FMDQ Securities Exchange. This surge in trading activity was driven by an influx of foreign investor dollars into the market.

Analysts predict that daily trades reaching $1 billion are imminent, following a significant increase in foreign inflows into naira assets. This surge comes after the Central Bank’s decision to hike rates by 600 basis points in just one month, alongside the decision to allow the naira to trade freely.

Foreign investors played a significant role in driving demand at a recent Treasury Bill auction, accounting for 75 percent of the total demand. As a result of these developments, the naira strengthened to as high as N1,271/$ within the trading day, marking a notable appreciation in value. The recent FX policy measures implemented by the Central Bank have contributed to this appreciation, with the naira gaining 2.34 percent of its value against the dollar in less than one day.

Source: Business Day