On November 23, 2023, forex turnover witnessed a substantial increase of 61.86%, reaching $198.21 million. The Nigerian naira continued its depreciation against the US dollar at both the official and parallel markets.
Key points:
- Exchange Rate Decline:
- The naira depreciated by 1.14% to close at N840.53 to a dollar, compared to N830.97 on the previous day.
- Intraday high and low were recorded at N1135/$1 and N743.43/$1, respectively, with a significant spread of N391.57/$1.
- Forex Turnover:
- Forex turnover at the official NAFEM window increased by 61.86%, reaching $198.21 million.
- Parallel Market Rate:
- In the parallel forex market, the naira depreciated by 0.87%, quoted at N1150/$1. Peer-to-peer traders quoted around N1149.50/$1.
Economic Analysis:
- Olatunde Amolegbe, MD of Arthur Steven Asset Management Limited, emphasizes the importance of market and participant confidence for exchange rate stability. He suggests that clearing FX commitment backs and reducing currency speculation through monetary policy tools could positively impact market confidence.
- Bismarck Rewane, MD/CEO of Financial Derivatives Company Limited, anticipates ongoing naira volatility due to lingering forex supply concerns. The scarcity of dollars is likely to encourage speculative buying, with more market participants taking long positions on the dollar and shorting the naira.
In conclusion, the surge in forex turnover and continued naira depreciation highlight the challenges in Nigeria’s foreign exchange market. Economic experts emphasize the need for confidence-building measures, structural changes, and increased efforts for import substitution to address the prevailing issues.
