Stanbic: YTD FX turnover similar to pre-Covid levels

The current state of Nigeria's foreign exchange (FX) turnover has been a topic of discussion, with analysts at Stanbic IBTC highlighting that the year-to-date performance is similar to pre-Covid levels. Oluwamayowa Sanni, Financial Institutions Sales Manager at Stanbic IBTC, shed light on the market liquidity situation during an interview on CNBC Africa. Sanni emphasized the importance of analyzing data to understand that FX turnover has reached over 46 billion, a significant increase from previous years. In 2019, the FX activities mirrored the current market trends, with a shift in FX supply sources from offshore investors to exporters and remittance companies. The Central Bank of Nigeria's reforms have played a crucial role in driving FX market activities, leading to a more diverse pool of FX suppliers contributing to market liquidity. The discussion also touched on the country's foreign reserves, which currently stand at around 38 billion. Sanni expressed optimism that the reserves could potentially exceed 40 billion by the end of the year, provided global sentiments remain positive. The conversation delved into future FX trajectory predictions, with projections suggesting a stabilization between 1.4 and 1.6 in the near term. However, Sanni urged caution in pegging the currency, emphasizing the need for an effective and functional FX market to drive sustainable growth. Looking ahead, the implementation of the electronic foreign exchange matching system by the Central Bank of Nigeria was analyzed for its potential impact on price discovery and currency stability. Sanni referenced a similar initiative in Kenya, which led to currency appreciation and reduced volatility. The new platform is expected to narrow bid-offer spreads and foster a more stable currency environment, ultimately aiding in price discovery and market efficiency. In conclusion, the conversation highlighted the importance of market analysis and effective policy implementation in driving Nigeria's FX market towards recovery and stability. Sanni's insights provided valuable perspectives on current market trends and future outlook, underscoring the significance of data-driven decision-making in navigating the complexities of the FX landscape.