Daily average forex turnover on the FMDQ platform for the month of November has reached $294 million, making it the highest recorded so far this year.
This figure is based on Nairametrics’ analysis of forex turnover data over the past year, as Nigerians continue to grapple with foreign exchange challenges.
Daily average forex turnover serves as a critical benchmark for the forex market, reflecting the level of liquidity in the official forex market.
What the data is saying
A closer examination of FMDQ data shows that the daily average forex turnover for November stands at $293.9 million, with the exchange rate averaging N1,667/$1.
- The next highest daily average turnover was recorded in March, at approximately $252 million per day.
- Forex turnover has experienced a steady rise as the year comes to an end, with October’s average turnover also reaching $245 million, the third-highest monthly figure this year.
- This marks a significant improvement compared to the four-month period between June and September 2024, during which daily average turnover remained below $200 million.
A record-breaking November
November started slowly, with daily average forex turnover at just $94 million and $79 million during the first two trading days.
- However, activity picked up significantly in the second week, highlighted by a record daily turnover of $1.4 billion on November 8th.
- This exceptional trading volume is the primary reason for November’s record-breaking performance.
- The final days of the month also saw remarkable trading activity, with turnovers of $425 million, $337 million, and $560 million recorded on November 26th, 27th, and 28th, respectively.
Despite the surge in forex turnover in November, the gap between the official and parallel market exchange rates widened to approximately N100.
Improving capital flows
The Central Bank of Nigeria (CBN) reported in October that foreign remittances had increased from a monthly average of $200 million to about $600 million, boosting liquidity in the market.
At its most recent Monetary Policy Committee (MPC) meeting, the CBN acknowledged the ongoing exchange rate pressures and emphasized the need for measures to enhance market liquidity.
- “Members, however, expressed concern over persisting exchange rate pressure, reflecting continued high demand in the market. Consequently, the Committee urged the Bank to explore measures to boost market liquidity,” the MPC communiqué stated.
Despite these challenges, Nigeria has seen a rise in external reserves, which climbed to $40.8 billion as of November 21, 2024, up from $40.06 billion at the end of October.
This level of reserves is sufficient to finance 17 months of imports.
Market close: The exchange rate closed on November 28th at N1,644/$1, with intraday highs and lows of N1,701/$1 and N1,557/$1, respectively. Daily turnover for the day stood at $560 million.
- In the parallel market, the exchange rate averaged N1,750/$1, according to Nairametrics’ checks.
