The Nigerian foreign exchange (FX) market saw less activity in early August 2024. This happened at the same time as the Central Bank of Nigeria (CBN) held a Retail Dutch Auction.
Data from FMDQ, shared by Nairalytics, shows a big drop of $409.16 million. The total FX turnover fell to $1.5 billion from August 5 to 16, 2024. This was down from $1.91 billion between July 22 and August 2, 2024.
Even though the overall turnover dropped, there was a 15% increase between the first and second weeks of August. It went up from $698.01 million to $804.74 million.
Naira Value Falls by 5%
Between late July and mid-August, the naira dropped by 5% against the dollar.
The naira moved from N1,500.32/$1 on July 22, 2024, to N1,579.89/$1 on August 16, 2024, in the official market.
The biggest drop happened on July 23, when the naira fell by 3.13% to N1,548.76/$1.
The exchange rate kept dropping in smaller amounts, reaching N1,609.29/$1 by July 26.
The highest exchange rate recorded was on August 2 at N1,617.08/$1.
There were a few days when the naira gained value, like on July 31, August 1, and August 9. But it quickly started dropping again.
These numbers show that the market is struggling. The naira keeps losing value against the dollar, showing economic issues, likely due to supply and demand problems.
What This Means for You
The changes in FX turnover show different levels of money flow in the market. Regulators might step in to stabilize the naira or reduce sudden changes.
More FX turnover on certain days hints that there might be more supply of dollars or some measures to support the naira.
In the first week of August, the Central Bank of Nigeria (CBN) sold $876.26 million at N1,495/$1 to 26 banks in its Retail Dutch Auction.
The CBN said it got bids for $1.18 billion from 32 banks. But bids from six banks got disqualified. Four banks missed the deadline, and two didn’t fill out the forms correctly.
Newslodge reported that on August 6, 2024, forex turnover on FMDQ was only $61.9 million, the lowest since January 2024.
This was the second lowest daily turnover this year, second only to $59.6 million recorded on January 8, 2024.