Turnover in Nigeria’s foreign exchange market jumped to $844 million on February 3, the highest dollar trade since June 2, 2022, according to data compiled by the FMDQ Securities Exchange Ltd.
The amount is three times more than the $266 million traded on February 1.
The spike can be attributed to the latest reforms by CBN governor, Olayemi Cardoso, who unveiled a series of measures that enabled the naira to trade more freely against the dollar.
There is better transparency in the official market and banks were mandated to offload excess dollars. The CBN also removed the cap on transactions by the International Money Transfer Operators (IMTOs).
The improved supply is rubbing off on the embattled naira which suffered wild swings last week.
The naira strengthened to N1419/$ on Monday, up from N1435/$ Friday.
Parallel market rate is not yet strengthening as much as the official rate. This is fanning fears that it may only be a matter of time before a huge gap re-emerges between both rates.
The dollar sold for N1455 on the streets on Tuesday, leaving a 2 per cent gap compared with the official rate.
“Rates will first be sticky, that’s why players were asking CBN to act quickly to avoid the dollar rate getting too high,” a market source familiar with the matter said.
“It will ultimately calm, but supply is the answer. There has to be supply from the FPIs and domiciliary accounts. Nigerians have to be incentivised to sell dollars,” the source said.
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