On Friday, January 19th, 2024, forex turnover experienced a 17.36% decline to $145.89 million as the Nigerian naira witnessed a marginal depreciation against the dollar in both the official and black markets.
At the official NAFEM trading window, the domestic currency depreciated by 0.04%, closing at N902.45 to a dollar. This reflects a N0.37 loss or a 0.04% decrease compared to the previous day’s close at N902.08.
Throughout the trading day, the intraday high reached N1200/$1, while the intraday low was N467/$1, indicating a wide spread of N733/$1.
According to data from the official NAFEM window, the forex turnover at the end of trading was $145.89 million, marking a 17.36% decrease compared to the previous day.
In the parallel forex market, where forex is unofficially sold, the exchange rate was quoted at N1350/$1, representing a 1.85% decrease from the previous day. Peer-to-peer traders quoted around N1350.60/$1.
Financial experts, including Olatunde Amolegbe, the former President and Chairman of the Chartered Institute of Stockbrokers, emphasized the importance of market and participants’ confidence for exchange rate stability. He noted that the decision to clear FX commitment backs would be positive for market confidence, but the desired impact might manifest in the medium term. Amolegbe also stressed the need for structural changes to encourage import substitution, such as improved security, better infrastructure, increased foreign direct investments, and promoting local production.
Bismarck Rewane, the Managing Director/CEO of Financial Derivatives Company Limited, highlighted in a report that the naira is expected to remain volatile due to lingering forex supply concerns. The scarcity of the dollar suggests that speculative buying is likely to persist, with more market participants taking long positions on the dollar while shortening the naira.
