The exchange rate between the naira and dollar snapped 7 consecutive days of losses to record its first gain on Wednesday, May 15 2024.
Data from the FMDQ indicates the exchange rate closed at N1459.02 to gain 4.21% the first gain after back to back losses that saw the official exchange rate fall below the N1,500/$1 mark.
The Naira appreciated contrast with the N1520.4/$1 recorded the previous day.
This represents a significant recovery after a 2.78% depreciation on May 14, 2024. The appreciation comes after a decline over the last week, with the Naira losing approximately 11% of its value in the official market.
Key highlights
The increase in forex turnover to $289.14 million, a 124.56% rise from $128.76 million the previous day, likely contributed to this appreciation.
- The increase in liquidity on the market also comes after the daily turnover in the forex market witnessed a sharp drop of about 41% the previous day.
- However, the intra-day high it a high of N1,593 approaching the N1,600 mark while the intra-day low traded at N1,401/$1. The wide disparity is indicative of a highly volatile official market.
- In the parallel market, the Naira traded between N1,520/$1 and N1,525/$1 on Wednesday based on the quotes we received.
What You Should Know
- Nairametrics earlier reported that a senior official of the Association of Bureau De Change Operators (ABCON), who chose to remain anonymous, noted that a lack of supply was a major factor causing the depreciation.
- The official also strongly refuted claims in some quarters that BDC operators are to blame for the recent fluctuations in exchange rates.
- He further disclosed that they have received only around $40 million from the apex bank over the past three months—an amount far from sufficient to satisfy customer demand.
- The official also tackled the perception that BDC operators buy dollars at lower official rates to sell them at inflated prices on the open market. He further revealed that less than a third of BDCs had received their dollar allocations from the CBN, and those who did, received them sporadically and insufficiently.
- The CBN activated plans to double foreign-currency remittance flows through formal channels by granting 14 new (IMTOs) Approval-in-Principle (AIP), according to the Bank’s Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali on Wednesday.
- Sidi Ali noted that increasing formal remittance flows will help the historical volatility in Nigeria’s exchange rate caused by external factors, such as fluctuations in foreign investment and oil export proceeds.
- Already, Nigeria recorded $282.61 million as total direct foreign exchange (FX) remittances in the first quarter (Q1) of 2024. The figure represents a decrease of $18.96 million or 6.28% compared to the $301.57 million diaspora remittances recorded in Q1 2023.
- The CBN earlier reached an agreement with International Money Transfer Operators (IMTOs)to set up a Collaborative Task Force to double remittance inflows into the country. The task force formed to double remittance inflows into Nigeria reports directly to Yemi Cardoso, the Governor of the CBN.
- At a CBN roundtable held during the World Bank/ International Monetary Fund (IMF) Spring Meetings in Washington DC, experts outlined measures that must be taken by Nigeria to improve foreign exchange remittance flows into Nigeria. One of the measures is to reduce the cost of transactions for the diaspora to encourage them to send more forex to Nigeria.
- Stakeholders also called for Nigeria’s removal from the grey list of the Financial Action Task Force (FATF), with a view to reducing high transaction costs for remittance flows.
