Forex turnover at the Investor and Exporters window dropped by approximately 43% on Friday, showing some kind of reversal to the improved liquidity in the foreign exchange market that was recorded the previous day. This is according to data from the FMDQOTC, an exchange where forex is traded by foreign investors and exporters.
According to the data tracked by Nairametrics, forex turnover dropped from $66.61 million on Thursday to $38.12 million on Friday representing an approximately 43% decline day on day. The daily turnover of $38.12 million is a far cry from the over $200 million recorded in January 2020.
The volatility and uncertainty in the foreign exchange market seems to persist due to liquidity shortages across markets. Liquidity remains quite tight in the foreign exchange market with the average turnover in the I&E market significantly down to about $45.5 million in the month of May compared to $297.5 million that was recorded in January.
Several reports tracked by Nairametrics indicate the accumulated demand for forex in the market could be between $1.5 -$5 billion as supply shortages persist. Forex shortages have persisted since the crash in oil prices coincided with the global lockdown due to Covid-19. The rise in demand and contrasting fall in supply has called for another round of devaluation which the CBN has insisted it has no plans to implement. A devaluation last occurred in March. Speculators have thus thronged to the black market widening the disparity between it and the I&E window.
In a related report, the exchange rate on the I&E window depreciated on Friday closing at N386.50/$1 compared to N385.70/$1 reported on Thursday, June 18th, representing an 80 kobo drop. The volatility of the naira in the foreign exchange market continued on Friday, as the local currency was weakened at the Investors and Exporters (I&E) window.
At the black market where forex is traded unofficially, the exchange rate between the naira and dollar depreciated by N2 to close at N455 to a dollar on Friday as against the N453 to a dollar on Thursday. The rate at the start of the week was N450/$1.
News continues after this ad
Nigeria continues to maintain multiple exchange rates comprising of the CBN official rate, the BDC rates, and the I&E window. Nairametrics reported earlier in the week that the government is mulling unifying the multiple exchange rates in a bid to increase the amount available for state governments to share.
Meanwhile, the Central Bank of Nigeria on Friday debited 26 banks with the sum of N216.1 billion as part of its Cash Reserve Requirement (CRR) compliance requirement. The latest CRR debit is coming ahead of the CBN’s foreign exchange auction. This is reported to be part of the measures to support the naira, thereby leading to a spike in money market rates. The CBN is trying to manage the exchange rate using the CRR.