The official Nigeria Autonomous Foreign Exchange Market witnessed a surge in foreign exchange transactions, hitting $584 million, as reported by data from the FMDQ Exchange on Tuesday. This marks a significant increase from the previously recorded daily transaction of $440 million on the platform.
Simultaneously, the national currency experienced a decline against the United States dollar at the official market on Tuesday, closing at N1433 per dollar, compared to N1419 per dollar on Monday.
Data from the FMDQ Security Exchange revealed a notable uptick in forex turnover, reaching $584.53 million on Tuesday from $440.13 million recorded on Monday, representing a 32.8% increase.
The improved liquidity follows efforts by the Central Bank of Nigeria to stabilize the foreign exchange rate. In addition to commercial banks, the Central Bank of Nigeria, oil firms, and multinationals also participate in selling dollars at the Nigerian Autonomous Foreign Exchange Market.
Last week, the apex bank introduced new circulars and guidelines aimed at enhancing liquidity and reducing the gap between parallel and official exchange rates. In a significant move, the CBN ordered banks to adjust their FX exposures to address concerns over the growing trend of banks holding large foreign currency positions.
Under the circular titled “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks,” the CBN mandated that banks’ Net Open Position (NOP) must not exceed 20% short or 0% long of the bank’s shareholders’ funds. Banks exceeding this limit were given a deadline of February 1, 2024, to comply.
In response to these adjustments, the national currency saw improvements at the official market in the past week, closing at N1,455.59 per dollar on Wednesday, N1,445 per dollar on Thursday, and N1435.53 per dollar on Friday.
However, after trading on Tuesday, the naira experienced a marginal depreciation of 0.85%, with the dollar quoted at N1,433.89, slightly stronger than the N1,421.70 quoted on Monday at the NAFEM market.
At the parallel market, Bureau De Change operators reported the dollar trading between N1,480 and N1,485, reflecting an increase in the exchange rate compared to previous rates.
While some operators expressed concerns about the rising price of the dollar, economic managers remain optimistic about the naira’s prospects, forecasting a firming up of the currency in both markets in the coming days.
