The exchange rate between the naira and dollar in the official NAFEM Window has appreciated to N1,468.99/$1 on Monday, May 20, 2024.
This means that the week started with a 1.93% increase when compared to the N1,497/$1 on Friday, May 17, 2024.
It had earlier recorded a 2.5% gain from the N1,593.9/$1 recorded on Thursday, which was the weakest since March 20 this year.
This was the second consecutive appreciation this month amid severe currency depreciations. The first one was recorded on May 3 and May 6, 2024.
93% increase in dollar supply on official market
The increase in forex turnover to $161.41 million, a 93.31% rise from $83.5 million recorded on Friday, likely contributed to this appreciation.
- The increase in liquidity on the market also comes after the daily turnover in the forex market experienced a significant drop in turnover between Thursday, May 16, and Friday, May 17, 2024, recording a steep 69.4% decline.
- The amount on Friday was the lowest turnover rate since January 20, 2024. The trading dynamics on Monday further affirmed the erratic nature of the market.
- During intra-day trading, the exchange rate peaked at an intra-day high of N1,550/$1, highlighting a temporary surge in dollar sales.
- Conversely, the intra-day low was N1,400/$1, reflecting periods of heightened buying pressure on the naira.
The sharp movements within a single trading day suggest heightened uncertainty and instability, making it challenging for businesses and investors to plan their financial activities.
What you should Know
Nigeria’s foreign exchange (FX) reserves increased by approximately $535 million over the past 28 days.
- The latest data from the Central Bank of Nigeria (CBN) revealed a steady upward trend in the reserves, showcasing the country’s resilience in maintaining its financial stability amidst challenging economic conditions.
- The CBN reported that the FX reserves rose from $32.107 billion on April 19, 2024, to $32.642 billion by May 16, 2024. This growth represents a boost for the country’s external reserves, which play a crucial role in stabilizing the naira and supporting the economy.
- The apex bank recently 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.
- 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.
- The ongoing Monetary Policy Committee (MPC) meeting of the CBN) may be a critical factor influencing investor sentiment and attracting more foreign exchange into country as the apex bank struggles to curb inflation and FX volatility.
