On Tuesday, Nigeria’s foreign exchange market experienced its highest turnover in a single day since 2017, signaling a significant shift from a prolonged dollar shortage that has hindered economic activity for years.
Data from FMDQ Securities Exchange revealed that $1.085 billion was traded, marking a 27% increase from the previous trading day and nearly five times the average daily transactions in 2024. The surge in liquidity is attributed to reforms by the Central Bank of Nigeria (CBN), according to Tajudeen Ibrahim, director of research and strategy at Chapel Hill Denham, a Lagos-based investment bank. These reforms have attracted dollar inflows, with foreign portfolio investors drawn by higher interest rates on government debt and an undervalued naira.
Additionally, the CBN’s clearing of a long-standing foreign exchange forwards backlog has restored confidence in past reforms.The improved liquidity in the foreign exchange market has also led to a strengthening of the naira, which reached a three-month high of N1,278 per US dollar compared to N1,309 on the previous Thursday.
Source: Business Day