On Friday, the official foreign currency market’s dollar supply increased by 180.59 percent to $440.13 million.
This is as the naira ended a volatile week at N1435.53/$ on Friday, ending the week. FMDQ Security Exchange data shows that FX turnover increased from $156.86 million on Thursday to $440.13 million on Friday, a 180.59 percent increase. But in addition to commercial banks, NAFEM also sees the sale of dollars by the Central Bank of Nigeria, oil companies, and global corporations.
Improved liquidity is the result of actions taken by the Nigerian Central Bank to stabilize the foreign currency market. Friday’s closing rate for the naira was N1435.53/$. It had an intraday high of N1526/$ and low of N838.96/$.
On Friday, the naira closed at N1,420/$ on the parallel market with a stable demand for the greenback.
Last week, the apex bank rolled out new circulars and guidelines to boost liquidity and narrow the gap between the parallel and official rates of the foreign exchange market. In its most significant foreign exchange guideline, last week, the CBN ordered banks to adjust their FX exposures.
In its circular titled, “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks”, the apex bank expressed worry over the growing trend of banks holding large foreign currency positions.
It said, “The Central Bank of Nigeria has noted with concern the growth in foreign currency exposures of banks through their Net Open Position (NOP). This has created an incentive for banks to hold excess long foreign currency positions, which exposes banks to foreign exchange and other risks.”
The CBN mandated that banks’ NOP must not exceed 20 percent short or 0 percent long of the bank’s shareholders’ funds going forward. It gave a February 1, 2024 deadline to those who had exceeded its limit.
Meanwhile, on Friday, S&P Global Ratings affirmed its ‘B-/B’ long- and short-term foreign and local currency sovereign credit ratings on Nigeria. It also affirmed its ‘ngBBB+/ngA-2’ long- and short-term Nigeria national scale ratings and maintained a stable outlook for the country.
According to the global rating firm, the stable outlook is based on the government’s capacity to continue its reform agenda, which, if delivered, would support growth and fiscal outcomes.
