The Nigerian official foreign exchange (FX) market witnessed a significant increase in turnover, rising by 40% this week.
Data gathered from the FMDQ by Nairalytics, the research arm of Nairametrics, shows an increase of $292.75 million, from $740.92 million last week (July 1 to 5, 2024) to $1.03 billion this week (July 8 to 12, 2024).
The last time weekly FX turnover crossed the $1 billion mark was in the first week of June when a total of $1.05 billion was recorded.
What the data shows
- Last week Monday (July 1, 2024), the turnover was $122.31 million. By the following Monday, July 8, 2024, the turnover had increased to $133.46 million, reflecting a rise of 9.11% and indicating a slight increase in market activity at the beginning of this week.
- The turnover last week Tuesday (July 2, 2024) was significantly high at $213.31 million. This week on Tuesday, July 9, 2024, the turnover was $188.19 million, a decrease of 11.77%. However, there was an increase from the previous day’s turnover by 41.01%.
- Also, on Wednesday, July 10, 2024, the turnover rebounded to $236.70 million, representing an increase of 106.01% compared to last week Wednesday. There was also an increase of 25.78% from the previous day’s turnover.
- Turnover last week Thursday (July 4, 2024) was $173.51 million. By the Thursday of this week (July 11, 2024), the turnover had surged to $348.82 million, marking an increase of 101.03%. FX turnover peaked at this one-month high, recording a daily increase of 47.37%, and coincided with the second day of dollar sales by the Central Bank of Nigeria (CBN) on the official market.
- The impressive week ends on a flat note as FX turnover crashed for the first time this week, falling significantly by 63.73% on Friday to $126.50 million, hitting the lowest level this week. However, it was an increase of 8.23% compared to the last week Friday’s $116.88 million.
What you should know
The surge in FX turnover this week occurred during a two-day sale of a dollar worth $122.67 million to 46 authorized dealers by the Central Bank of Nigeria (CBN).
In a statement by Dr Omolara Duke, the Director of Financial Markets at the CBN, it was disclosed that the apex bank sold $67.5 million to 27 authorized dealers while purchasing $2.5 million from one authorized dealer on Wednesday.
The bid range for these transactions was between N1,480/$1 and N1,500/$1. Payments for these transactions are scheduled for July 12, 2024, following a two-day settlement cycle (T+2).
On Thursday, the CBN sold $55.17 million to 19 authorized dealers at a rate of N1,540.0/$1. No foreign exchange was purchased on this date. The payments for these spot sales are due on July 15, 2024.
The CBN further urged all authorized dealers to ensure that foreign exchange purchases from the bank are exclusively used for trade-backed transactions, which must be reported within 72 hours.
However, the official market shakes off the CBN’s boost, as the exchange rate from naira to dollar crashed to a new low in July, closing at N1,563.80/$1 on Friday, July 12, 2024.
The local currency traded between a low of N1,496.46/$1 and a high of N1,586/$1 on Friday, inching towards the N1,600 ceiling.
