The Central Bank of Nigeria (CBN) Investor and Exporters' (I & E) currency window for investors and exporters has traded around $3.83 billion since it was established with the naira trading more strongly on the black market.
The window, where buyers and sellers are free to agree on exchange rate, was introduced in April to try to attract foreign investors into the country and boost the supply of dollars.
Traders said $407 million were traded last week compared with $354.8 million in the previous week, indicating a gradual return in investors' confidence to the West African nation's foreign exchange market.
"We have seen continuous improvement in dollar inflow into the market in recent time from offshore investors and this has also reflected in the volume of transactions at the equity market," one currency trader told Reuters.
Before the window was introduced, the CBN was the main supplier of hard currency on the interbank forex market, after foreign investors fled naira assets in the wake of an oil price slump in 2014.
A CBN spokesman last month said the bank was, on average, responsible for less than 30 per cent of trading in the investor market.
The window, however, has effectively introduced yet another exchange rate to the five already in operation. These include a retail rate set by licenced exchange bureaus, as well as official and black market rates.
At the forex window, market regulator FMDQ OTC Securities Exchange quoted the naira at N364.56 to the dollar yesterday, compared with the N367 to the dollar in the black market.
The local currency traded at about N520 to the dollar in the black market in February and at the N400 in the forex window when it opened in April, with the two rates then starting to converge.
CBN Governor, Mr. Godwin Emefiele, told Arise TV at the weekend that the I & E window was opened up for more and more people who are interested.
"That was why we introduced the I & E window. We said if you wanted forex, you can go to that market and buy it once it fits the pricing structure of the goods or whatever you want to do.
"And that has helped to some extent in complementing the flow of forex into the market and has resulted in the appreciation that we have seen. It is the market that determines the direction of the exchange rate," he said.
According to him, the CBN feels gratified to have seen a movement from as high as N500/$1 and converging heavily southward to its present value of about N360 to the dollar.
"All we need to do is to keep monitoring the market and ensuring that if there are certain areas we need to address, we address them. By doing that, we would see more flows into the economy, which would help grow the economy," he said.
Meanwhile, the CBN yesterday continued its foray into the foreign exchange market by injecting a total of $142.5 million into the interbank.
A breakdown of the intervention indicated that the bank offered the sum of $100million to dealers in the wholesale segment, while it allocated the sum of $23 million to the small and medium scale enterprises (SMEs) segment.
Those requiring foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA) received $19.5 million.
The bank last week intervened in the retail segment of the market with the sum of $254.3million.
Confirming the latest round of forex intervention, the spokesperson of the apex bank, Isaac Okorafor, said the CBN will continue to carry out its regular mediation in the market so as to keep the market liquid and guarantee the international value of the naira in line with its mandate.
While reiterating the bank's resolve to intervene in the market based on bids received from dealers on behalf of their respective customers, Okorafor said the CBN would not relent in ensuring transparency and efficiency in the sale of forex.
According to him, this commitment prompted the bank to mandate dealers to make public their forex utilisation.
He therefore urged all stakeholders to continually play their roles to guarantee transparency in the market.
Meanwhile, the naira maintained its stand at the Bureau de Change (BDC) segment of the forex market, exchanging at an average of N364/$1 in Lagos, Abuja and Kano respectively.