Forex turnover dropped by 56.17% to $203 million as the Nigerian naira gained against the dollar marginally on Wednesday, February 7th, 2024 at the official market.
Conversely, the exchange rate deteriorated in the black market during the same period.
This is despite a slew of policies from the Central Bank of Nigeria (CBN) aimed at improving forex supply
Meanwhile, the domestic currency depreciated 1.12% to close at N1418 to a dollar at the close of business, based on data from NAFEM where forex is officially traded.
- This represents an N14.03 loss or a 1.12% decrease in the local currency compared to the N1433.89 it closed at on the previous day.
- The intraday high recorded was N1,510/$1, while the intraday low was N896.28/$1, representing a wide spread of N613.72/$1.
- This is the 7th straight day that the exchange rate intra-day high has remained at above N1,500/$1.
- According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $203.93 million, representing a 56.17% decrease compared to the previous day.
- However, the naira depreciated marginally at the parallel forex market where forex is sold unofficially, the exchange rate quoted at N1465/$1, representing a 1.02% decrease over what it closed the previous day, while peer-to-peer traders quoted around N1482.50/$1.
What you should know
Nairametrics reported that the Governor of the Central Bank of Nigeria (CBN) has stated that recent reforms of the apex bank are beginning to yield positive results concerning liquidity in the foreign exchange market.
Mr. Cardoso stated this during an appearance before the House of Representatives today saying that there has been an increase in dollar liquidity within the country’s currency market.
He stated,
- “As of yesterday, the volume of transactions in our market was over $800 million. This is the first time in many years it has achieved this level.
- “I want to emphasize that we are now at a turning point and bold reforms are underway across different segments of the economy. I’m confident that positive outcomes are already emerging and will become more apparent shortly.”
Over the past weeks, the naira has depreciated significantly against the dollar starting since January 26th.
This decline follows measures taken by the central bank to align the official market value closer to the parallel market, as part of an ongoing effort to bridge the chasm between the rate at the NAFEM window and that of the parallel market.
Yesterday, the naira reached an intra-day high of N1,526/$1 but closed at N1,419.86/$ on the NAFEM window.
Reforms of the CBN
- The scarcity of dollars in the domestic market has significantly contributed to the currency’s weakness. The central bank has been actively addressing this issue by urging Nigerians residing abroad to repatriate their funds through official channels, aiming to stabilize the currency.
- Part of the reforms the CBN has introduced includes clearing the backlog of forex obligations which Mr. Cardoso claims to have settled $2.3 billion remaining just $2.2 billion.
- Also, the apex bank has mooted plans to establish a singular foreign currency (FCY) gateway bank that will centralize all correspondent banking activities and provide incentives to individuals who hold foreign currencies outside the formal banking system.