Business & Economy
Forex Market Sees Lowest Turnover Since January as Naira Exceeds N1,600/$1
The FMDQ forex market recorded a turnover of just $61.9 million, marking the lowest since January 2024. This figure is the second-lowest daily average turnover this year, following the $59.6 million recorded on January 8, 2024.
EKO HOT BLOG learnt that in January, forex turnover was notably low as the central bank grappled with strategies to restore confidence in the country’s forex policy. Despite this, the forex market has remained relatively stable, experiencing a depreciation of over 40% so far this year.
According to FMDQ data, the exchange rate closed at N1,601/$1 on Tuesday, a slight appreciation of 0.38% from N1,607.15/$1 on Monday. The intra-day highs and lows for the week were N1,623 and N1,560, respectively, indicating further weakening on the high end of trades.
Naira and Dollar
The market turnover of $61.9 million represents a 19.7% decrease from the $77 million reported the previous day. Notably, Monday’s turnover of $77 million was also the lowest since January, suggesting a potential squeeze in the forex market.
A trader informed Nairametrics that this could be a result of the “end hunger” protest affecting businesses nationwide. Another source attributed it to massive stock market sell-offs reported on Monday. Meanwhile, in the parallel market, the exchange rate was around N1,605/$1, aligning with official rates.
Nigeria’s external reserves stood at $36.8 billion as of August 5, 2024.
The Central Bank of Nigeria (CBN) has not sold any foreign exchange (FX) on the official market this week. The ongoing 10-day hunger protest has likely slowed business and trading activities, leading to lower FX turnover.
Two weeks ago, the CBN sold a cumulative $148 million to authorized dealers, marking the third authorization of FX dealers in July as part of efforts to boost liquidity in the FX market.
The CBN had previously sold $106.5 million to 29 authorized dealer banks on July 18 and 19, 2024, at rates ranging from N1,498/$1 to N1,530/$1. Additionally, the CBN bought $9.5 million from four authorized dealer banks at rates between N1,510/$1 and N1,550/$1.
In July, the CBN sold at least $377.17 million to authorized FX dealers. The CBN plans to undertake a Retail Dutch Auction System (DAS) on Wednesday, August 7, 2024, to address demand for eligible transactions through authorized dealers.
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