“N1,534/$”: Forex Inflows Hit $2.2 Billion as Naira Sets New Record in Official Market
- The Nigerian foreign exchange market witnessed the highest dollar inflow worth $2.2 billion following CBN’s reforms
- The FX inflows surged by 66.7% in the official market but were insufficient to stabilise the naira, which fell to its lowest
- The CBN issued seven circulars to commercial banks and other financial institutions to stabilise the local currency
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Pascal Oparada has over a decade of experience covering Tech, Energy, Stocks, Investments, and Economy.
Foreign exchange inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM) rose by 66.7% recently to $2.2 billion after commercial banks and financial institutions complied with the new directives of the Central Bank of Nigeria (CBN).
The supply was, however, not sufficient as the naira’s value plunged by 2.3%.
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CBN issues circulars to calm FX market
The apex bank issued about seven circulars and guidelines with new limits for net open positions and removed restrictions on International Money Transfer Operators (IMTOs) Forex quotes as part of plans to boost liquidity in the FX market.
By the end of the first week in February, dollar inflows at the NAFEM window surged to $2.2 billion.
Naira plunges despite FX inflows
Leadership reports that the naira’s value at NAFEM had declined by 2.3%, closing the week at N1,469.97 per dollar with an intraday low of N830 and N1,550 per dollar at the official window.
In the black market, the naira’s value dropped to N1,470 to the dollar, indicating an 8.2% decline in the parallel market.
CBN governor confirms forex inflows
The development comes as the governor of the CBN, Olayemi Cardoso, told lawmakers that the country witnessed forex inflows of over $1 billion in one week after a long time.
The rise in dollar liquidity has reportedly reaffirmed investors’ growing confidence in the Forex market.
The minister of Finance and Coordinating Minister of the Economy, Wale Edun, also said at the event that the Nigerian government was committed to easing the pains of Nigerians via social security strategy.
Also, the apex bank recently announced that it has removed the +2.5% cap spread on interbank Forex transactions.
The statement was contained in a circular dated February 8, 2024, and signed by the director, Financial Markets Department, Duke Omotunde.
Meanwhile, the Nigerian currency set a new exchange record on Monday, February 12, 2024, after depreciating to N1,534 per dollar in the official market, the lowest ever in the history of the naira.
Forex dealers quoted the naira at a high of N1,550 and a low of N1,000 per dollar before gaining a little of N4 per dollar.
CBN sells $30m in spot market after five months
Legit.ng reported that for the first time since September 2023, the Central Bank of Nigeria (CBN) sold up to $30 million on the spot foreign exchange market on Tuesday morning, February 13th.
Investopedia defines a spot market as where financial instruments, such as commodities, currencies, and securities, are traded for immediate delivery.
The recent move by the central bank represented an effort to stabilise the naira, which is among the currencies with the worst performance globally, by 2024.
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Source: Legit.ng
