This week, the official foreign currency (FX) market in Nigeria had a notable 40% spike in transactions.
The analytics research division of The Chronicles, collected data from the FMDQ and the results show a $292.75 million increase from $740.92 million to $1.03 billion this week (July 8 to 12, 2024) previous week (July 1 to 5, 2024).
The first week of June saw a total of $1.05 billion in weekly foreign exchange turnover, the last time it above the $1 billion threshold.
What the information indicates
On Monday, July 1, 2024, of last week, the turnover came to $122.31 million. The turnover grew to $133.46 million by the following Monday, July 8, 2024, a 9.11% increase and a sign of a minor uptick in market activity at the start of this week.
At $213.31 million, the turnover on Tuesday, July 2, 2024, was notably high. Tuesday, July 9, 2024, was the current week’s turnover; it was $188.19 million, down 11.77%. On the other hand, there was a 41.01% rise in turnover from the day before.
Additionally, on Wednesday, July 10, 2024, the turnover increased to $236.70 million, a 106.01% rise from the Wednesday before. Additionally, there was a 25.78% rise in turnover over the day before.
On Thursday, July 4, 2024, there was $173.51 million in turnover. The turnover increased to $348.82 million by this Thursday, July 11, 2024, a 101.03% rise. The second day of dollar sales by the Central Bank of Nigeria (CBN) on the official market coincided with the one-month high for FX turnover, which saw a daily increase of 47.37%.
The stellar week came to an abrupt end on Friday as FX turnover reached a record low of $126.50 million, a substantial decline of 63.73% from the previous week. Nonetheless, it was an 8.23% gain over Friday’s total of $116.88 million from the previous week.
What to note
This week’s spike in foreign exchange turnover was caused by the Central Bank of Nigeria’s (CBN) two-day sale of a dollar valued at $122.67 million to 46 approved dealers.
The CBN’s Director of Financial Markets, Dr. Omolara Duke, revealed in a statement that the apex bank bought $2.5 million from one authorised dealer and sold $67.5 million to 27 authorised dealers on Wednesday.
For these trades, the bid range was N1,480/$1 to N1,500/$1. Payments for these transactions are expected to be made on July 12, 2024, after a settlement period of two days (T+2).
At a rate of N1,540.0/$1, the CBN sold $55.17 million to 19 authorised dealers on Thursday. On this date, no foreign exchange was bought. On July 15, 2024, the payments for these spot sales are expected.
The CBN also asked all licenced dealers to make sure that any foreign exchange acquired from the bank is only utilised for trade-backed transactions, which need to be disclosed to the authorities within 72 hours.
The official market, however, rejects the CBN’s stimulus since the naira to dollar exchange rate fell to a record low in July, closing at N1,563.80/$1 on Friday, July 12, 2024.
The local currency crept closer to the N1,600 barrier on Friday, trading between a low of N1,496.46/$1 and a high of N1,586/$1.
