Naira Strengthens to 1,339.33/$ as Forex Turnover Declines, CBN Data Shows
The Nigerian naira saw a significant appreciation to 1,339.33 against the US dollar at the close of trading on the official window on Monday, marking a remarkable gain of 9.68% compared to Friday’s rate of 1,482.81/$.
Data from FMDQ, the platform housing the Nigerian Autonomous Foreign Exchange Market, revealed a notable decrease in daily turnover, plummeting to $180.80 million from $556.25 million recorded on Friday, indicating a substantial decline of 67.50%.
During Monday's trading session at the official market, the naira reached an intraday high of N1,501 and a low of N1,310 against the dollar.
Conversely, at the parallel market, the naira traded at N1,520, reflecting a slight depreciation of 1.32% from Friday's rate of N1,500.
Last Friday, the local currency closed unchanged against the dollar, concluding the week with marginal strength at the official foreign exchange market following weeks of weakening. This trend, termed as seasonal fluctuation, was acknowledged by the Central Bank of Nigeria Governor, Olayemi Cardoso, during the post-Monetary Policy Committee meeting press briefing in Abuja last Tuesday.
Cardoso highlighted, “Members further observed the recent volatility in the foreign exchange market, attributing this to seasonal demand, a reflection of the interplay between demand and supply in a freely functioning market system.”
Meanwhile, recent data from the CBN indicates a 42% year-on-year decline in the demand for foreign exchange by individuals and companies engaged in importation and other forex-related activities.
An analysis of total sectoral utilization of foreign exchange revealed that 19 sectors and services received a forex allocation of $21.12 billion in 2023. However, this figure represents a significant 41.9% or $8.87 billion reduction from the $29.98 billion disbursed to industry players in 2022, according to the quarterly statistics report by the CBN.
The adoption of a floating exchange rate system for the naira by the CBN in June 2023 led to a notable depreciation of the domestic currency against the US dollar and other global currencies, marking a significant shift in Nigeria's forex market dynamics.
