The amount of money exchanged in foreign currency (known as forex) on the FMDQ official market was just $61.9 million. This is the lowest amount since January 2024.
This is also the second smallest daily average this year. The smallest amount was $59.6 million on January 8, 2024.
In January, there was a very low forex turnover because the Central Bank was trying to figure out how to make people trust the country’s forex policy again.
But since then, the forex market has stayed steady even though the currency’s value went down by over 40% this year.
What the Numbers Show
From FMDQ data, the exchange rate on Tuesday was N1,601 for $1, which is a little better than the N1,607.15 for $1 on Monday.
- Throughout the week, the highest and lowest rates were N1,623 and N1,560, suggesting that the exchange rate got weaker on the high end.
- The market turnover was just $61.9 million, down 19.7% from $77 million the day before.
- The $77 million on Monday was also the lowest since January, showing the forex market might be tight.
- A trader told Newslodge this might be due to the “end hunger” protests happening across the country, which is affecting businesses.
- Another source said it could also be because of the big stock market sell-offs reported on Monday.
Meanwhile, on the unofficial market, the exchange rate was around N1605/$1, pretty close to the official rates.
Nigeria’s foreign reserves were $36.8 billion as of August 5, 2024.
Things You Should Know
It seems the Central Bank of Nigeria (CBN) has not sold any foreign currency on the official market this week.
The ongoing 10-day hunger protest could be causing slow business and trading, leading to lower forex turnover.
Two weeks ago, the CBN sold $148 million to authorized dealers. This currency was sold to 29 banks at rates between N1,470 for $1 and N1,510 for $1. It was the third time CBN authorized forex sales in July to try and add more money to the forex market.
Earlier, the apex bank announced selling $106.5 million in forex to 29 banks.
In a statement from Dr. Omolara Omotunde Duke, Director of Financial Markets, it was revealed that on July 18 and 19, 2024, the CBN sold $106.5 million to 29 banks at exchange rates between N1,498/$1 and N1,530/$1. They also bought $9.5 million from 4 banks at rates between N1,510/$1 and N1,550/$1.
The central bank also said it sold $122.67 million to 46 banks two weeks ago.
In total, Nigeria’s central bank sold $377.17 million to authorized dealers in July.
The CBN plans to run a Retail Dutch Auction System (DAS) to help handle the demand for eligible transactions via authorized dealers on Wednesday, August 7, 2024.