CBN says Nigeria’s foreign exchange turnover rises above $400m daily

The Central Bank of Nigeria has revealed that Nigeria’s average daily foreign exchange turnover has risen to over $400 million, up from about $100 million recorded in 2023, reflecting growing investor confidence.

CBN said the rise in Nigeria average daily foreign exchange turnover also reflects improved market liquidity following ongoing reforms in the foreign exchange market.

The increase was disclosed by CBN governor, Olayemi Cardoso, at the launch of the revised Foreign Exchange Manual (4th Edition) in Abuja on Friday.

According to Mr Cardoso, the recorded average daily turnover was about $100 million in late 2023 when the governor assumed office, but the figure has now increased significantly as a result of reforms introduced by the bank.

The CBN boss said the increase, representing more than 300 per cent growth within three years, demonstrates improving confidence among investors and market participants in Nigeria’s foreign exchange market.

He explained that the global economy has become increasingly complex and uncertain, while the domestic economy has undergone structural adjustments, including efforts to diversify foreign exchange earnings and manage inflationary pressures in the past decade.

According to him, the developments have direct implications for investors’ confidence and market behavior.

The CBN governor said recent reforms have helped to create a more transparent and dynamic foreign exchange market, moving away from a system heavily dependent on periodic interventions by the central bank.

“I note with great interest that what we have seen with respect to liquidity in foreign exchange markets have been remarkable, it used to be a one-way market, CBN only came, intervened and went away, and everyone waited for when the central bank came again.

“And we have moved to a situation where the market is a lot more dynamic and there is tendency that the players will want to come in and exit with confidence, without unnecessary inhibitions, a transparent market does just that.

“When this administration took over, the average turn over per day was about $100 million, at the early days of the administration. And now it has gone to an average of $400 to $600 million per day,” Mr Cardoso said.

He added that the apex bank is targeting an average daily turnover of $1 billion.

“And I am very pleased that the goal is to ensure that we get to $1 billion a day and I know that is also a reflection of what banks, the authorised dealers themselves also feel,” he said.

Mr Cardoso further disclosed that the foreign exchange market had already achieved the $1 billion daily turnover mark on several occasions in previous months, indicating the possibility of sustained growth in market liquidity.

“I know at a retreat, this figure came up as a possibility and I know at a time indeed, it almost seems like out of reach, but I am very happy to note that in the course of the past couple of months, we have attained that $1 billion on a daily basis on number of occasions,” Mr Cardoso said.

At the launch of the revised foreign exchange manual, the CBN noted the initiative is aimed at deepening the foreign exchange market and improving liquidity across the Nigerian financial system.

“My hope is that as a result of all these we are doing, the foreign exchange market becomes deeper and more liquid,” Mr Cardoso stated.