The Nigerian naira experienced a marginal gain against the dollar at the official market, even as forex turnover plummeted by 56.17% to $203 million.
In contrast, the exchange rate deteriorated in the black market during the same period, highlighting the contrasting trends between official and unofficial forex markets despite efforts from the Central Bank of Nigeria (CBN) aimed at improving forex supply.
According to data from the Nigerian Autonomous Foreign Exchange Market (NAFEM), the domestic currency depreciated by 1.12%, closing at N1418 to a dollar by the end of the business day. This represents a loss of N14.03 or a 1.12% decrease compared to the previous day’s closing rate of N1433.89.
The intraday high and low recorded were N1,510/$1 and N896.28/$1, respectively, reflecting a wide spread of N613.72/$1. Notably, this marks the 7th consecutive day that the exchange rate’s intraday high has remained above N1,500/$1.
Forex turnover at the close of trading was reported at $203.93 million, indicating a significant 56.17% decrease compared to the previous day. However, at the parallel forex market where forex is sold unofficially, the naira depreciated marginally, with the exchange rate quoted at N1465/$1, representing a 1.02% decrease from the previous day’s closing rate.
Governor of the Central Bank of Nigeria (CBN), Mr. Cardoso, recently highlighted positive results stemming from the apex bank’s reforms, particularly regarding liquidity in the foreign exchange market. He noted a notable increase in dollar liquidity within the country’s currency market, with transactions exceeding $800 million, a level not seen in many years.
The decline in the naira’s value against the dollar in recent weeks follows measures aimed at aligning the official market value closer to the parallel market, part of ongoing efforts to bridge the gap between rates at the NAFEM window and the parallel market.
Addressing the scarcity of dollars in the domestic market, the CBN has urged Nigerians residing abroad to repatriate their funds through official channels to stabilize the currency. The bank has also made strides in clearing the backlog of forex obligations, settling $2.3 billion out of $2.2 billion remaining.
Additionally, plans are underway to establish a singular foreign currency (FCY) gateway bank, which will centralize all correspondent banking activities and provide incentives to individuals holding foreign currencies outside the formal banking system.
By: Delino Gayweh
Serrari Financial Analyst
February 8, 2024
